Who's most likely to owe AMT?

ISO exercisers, high earners in high-SALT states, large families w/ multiple dependents.

Does standard deduction trigger AMT?

No — standard deduction allowed for AMT post-TCJA.

Are HSA contributions added back?

No — HSA, 401(k), HRA all allowed for AMT.

ISO exercise — when does AMT hit?

When you exercise and hold (not sell same year). Spread = AMT preference item.

Can I avoid AMT by selling ISO same year?

Yes — same-year sale = no AMT, but treated as ordinary income (no LTCG).

AMT Alternative Minimum Tax 2027

AMT: 2027 exemption $86,600 single / $134,200 MFJ (TCJA extended via OBBB). Phase-out at $609K/$1.218M. 26%/28% rate above. Hit by ISO exercise, high SALT, multiple kids.

Alternative Minimum Taxable Income ($)

Filing Status

Regular Tax 1040 ($)

AMT Tax

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Additional AMT Owed

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Total Tax

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AMTI	—
AMT exemption (after phaseout)	—
AMT taxable base	—
Tentative AMT	—
Regular tax	—
AMT owed beyond regular	—
Total tax (regular + AMT)	—

The Alternative Minimum Tax (AMT) is a parallel tax system designed to ensure high-income taxpayers pay a minimum amount. Common triggers: incentive stock option (ISO) exercise, high state/local tax in low-tax states, large family size, AMT preference items.

OBBB and the 2027 AMT

The One Big Beautiful Bill Act (P.L. 119-21, July 2025) extended TCJA's higher AMT exemption ($86,600 single / $134,200 MFJ for 2027 estimated). Without this extension, exemption would have reverted to ~$71K single / $111K MFJ in 2026.

AMT Preference Items

Add back: state and local tax deduction, ISO bargain element, depletion allowance, passive activity losses, tax-exempt interest from private activity bonds. These reduce regular tax but not AMT.

AMT Exemption Phase-Out

Exemption phases out $1 for every $4 of AMTI above $609,300 single / $1.218M MFJ (2026 est). Fully phased out around $955K single / $1.755M MFJ. High earners lose the exemption entirely.

AMT Credit Carryforward

If you paid AMT due to timing differences (especially ISO exercise), you may receive a credit (Form 8801) in future years when regular tax exceeds AMT. Track this carefully to recover overpaid AMT.

Last updated May 2026. Sources: IRS AMT, Form 6251 Instructions.