AMT 2026 Calculator

What Is AMT?

Alternative Minimum Tax is a parallel federal income tax system enacted 1969 to ensure high-income filers pay minimum tax even after deductions. Computes tax two ways: regular tax and AMT tax. Owe the higher of the two. AMT adds back certain deductions (SALT, miscellaneous itemized, ISO exercise spread) and uses different brackets. Post-TCJA changes made AMT less impactful for most middle-class filers but ISO exercisers still hit it.

AMT 2026 Exemption and Rates

Exemption (subtracted from AMTI): $88,100 single / $137,000 MFJ. Phase-out begins at $626,350 single / $1,252,700 MFJ — reduces $1 of exemption per $4 of AMTI over threshold. AMT rate: 26% on first $232,600 of AMTI above exemption (2026), 28% above that. Compare AMT tentative tax to regular tax — owe the higher.

ISO AMT Trap

Most common AMT trigger: exercising Incentive Stock Options and holding shares. The spread (FMV minus strike) at exercise counts as AMT preference item but NOT as regular taxable income. Example: $200K ISO spread, $88K exemption = $112K × 26% = $29K AMT. Without ISO income on regular tax, this hits as surprise. Mitigate: spread ISO exercises across years, sell ISO same year (disqualifying disposition removes AMT), or pre-pay AMT to start regular-tax credit clock.

AMT Credit (MTC) — Recover Future Taxes

AMT paid due to 'timing items' (like ISO exercise) generates Minimum Tax Credit (MTC). Carries forward indefinitely. Used in future years when regular tax exceeds tentative AMT — credit applied to reduce regular tax. Many ISO exercisers eventually recover most AMT paid via MTC, but it takes 3-10 years and requires ongoing tracking (Form 8801). MTC is the silver lining of paying AMT on ISOs.

Sources: IRC §55-59, IRS 2026 inflation adjustments, Form 6251 instructions. Last updated: May 2026. Not tax advice.