OBBB AMT Exemption Calculator 2026
Calculate your 2026 Alternative Minimum Tax exemption and tentative minimum tax under the One Big Beautiful Bill Act. 2026 exemption: $88,100 single / $137,000 MFJ (estimated). Phase-out begins at $626,350 / $1,252,700. Free Form 6251 helper — runs entirely in your browser.
How AMT Works After OBBB
The Alternative Minimum Tax is a parallel tax system that recomputes income without certain deductions (state and local taxes, miscellaneous itemized, depreciation acceleration, ISO bargain element) and applies a flat 26%/28% rate to the excess over an exemption. The One Big Beautiful Bill Act made the TCJA-era AMT relief permanent — preserving the higher exemption and phase-out thresholds that dramatically reduced AMT exposure for middle-class filers. For 2026 (estimated, IRS-confirmed by November 2025 announcement), the exemption is approximately $88,100 (single) and $137,000 (married filing jointly). Phase-out begins at $626,350 (single) and $1,252,700 (MFJ), reducing the exemption by $1 for every $4 of AMTI above the threshold. The 26% rate applies up to $239,100 of AMT income above exemption; 28% above. Source: IRS Form 6251 (Alternative Minimum Tax).
Common AMT Triggers
The most frequent AMT triggers in 2026 are: (1) Large ISO exercise bargain element held across year-end — taxed at 26-28% on Form 6251. (2) Very large state income tax + property tax in high-tax states like California or New York — these are deductible for regular tax (subject to $10K SALT cap) but fully disallowed for AMT. (3) Private activity bond interest received from tax-exempt municipal bonds — taxed for AMT but not regular tax. (4) Net operating loss carryforwards computed differently for AMT. (5) Depreciation differences between regular tax and AMT for assets placed in service before 1999. With the post-TCJA SALT cap and the OBBB-preserved higher AMT exemption, only ~0.1% of filers owe AMT in 2026 — versus ~5 million households before TCJA. ISO exercise remains the single largest AMT-triggering event for technology workers. Source: IRS Form 6251 Instructions.
AMT Credit Recovery in Later Years
AMT paid in prior years generates a Minimum Tax Credit (MTC) tracked on Form 8801. The credit can offset regular tax in future years to the extent your regular tax exceeds your AMT for that year. The MTC is non-refundable but carries forward indefinitely. For an ISO exercise that triggered $50,000 of AMT in 2025, you accumulate a $50,000 MTC; selling the shares in a qualifying disposition in 2027 generates regular-tax LTCG that exceeds AMT, allowing you to recover some or all of the MTC against the regular tax liability. Track AMT cost basis (FMV at exercise) separately from regular-tax basis (strike price) on Form 6251 line 2k. Source: IRS Form 8801 (Minimum Tax Credit).
AMT Planning Tactics
To minimize AMT in 2026: (1) Exercise ISOs early in the year and consider same-day or before-year-end sale if AMT would be triggered — converts to ordinary income but avoids AMT timing trap. (2) Time deduction acceleration carefully — large miscellaneous itemized deductions and state tax prepayments are AMT-disfavored. (3) Avoid private activity bonds (AMT-taxable) and prefer "AMT-free" municipals if subject to AMT. (4) Bunch deductions in alternating years using Donor Advised Funds to clear the standard-deduction hurdle in itemizing years. (5) For ISO holders facing AMT, exercise an amount per year that exactly fills the AMT exemption — this maximizes long-term capital gains conversion without triggering AMT. See our ISO AMT Calculator for a multi-year strategy. Last updated May 2026.
Frequently Asked Questions
What is the 2026 AMT exemption after OBBB?
The 2026 AMT exemption is estimated at $88,100 for single filers and $137,000 for married filing jointly, pending official IRS confirmation in late 2025. The One Big Beautiful Bill Act preserved the TCJA-era higher exemption and phase-out thresholds, which dramatically reduced AMT exposure compared to pre-2018 law. Phase-out begins at $626,350 (single) / $1,252,700 (MFJ) and reduces the exemption by $1 for every $4 of AMTI above the threshold.
What are the AMT tax rates?
AMT applies at 26% on the first $239,100 of AMT income above the exemption (estimated 2026 break; IRS confirms annually) and 28% on amounts above. There are no further rate brackets — AMT is essentially a two-rate system unlike the regular seven-bracket structure. Capital gains and qualified dividends retain their regular tax rates (0%, 15%, 20%) for AMT purposes — they are taxed at the LTCG rate in the AMT computation, not at 26%/28%.
What triggers AMT for most filers?
The biggest 2026 triggers: (1) ISO exercise with shares held across year-end — the bargain element (FMV minus strike) is an AMT preference item. (2) Very high SALT in non-cap states (rare post-TCJA). (3) Private activity bond interest from tax-exempt munis. (4) Net operating loss carryforward differences. (5) Depreciation differences for property placed in service before 1999 (mostly historical). Post-TCJA and OBBB, the SALT cap removed the largest pre-2018 trigger — only a few hundred thousand filers owe AMT now versus 5 million pre-TCJA.
Can AMT paid be recovered later?
Yes — AMT paid on "deferral preferences" (mainly ISO bargain element) generates a Minimum Tax Credit (Form 8801) carried forward indefinitely. When you sell the ISO shares in a qualifying disposition, the regular tax on the long-term capital gain typically exceeds the AMT for that year, allowing recovery of part or all of the credit. AMT paid on "exclusion preferences" (private activity bonds, certain depreciation) is NOT recoverable — those AMT dollars are permanently extra tax.
How does the SALT cap affect AMT?
The SALT cap reduced AMT exposure for high-tax-state residents because the cap already limits their SALT for regular tax — making the AMT addback smaller. Pre-TCJA, a California household paying $40,000 in SALT had $40,000 added back for AMT. Post-TCJA/OBBB, they deduct only $10,000 for regular tax (and possibly more under OBBB MFJ phase-up), so the AMT addback is only $10,000-$40,000. Combined with the higher exemption, this is why most former AMT payers no longer owe AMT.
Do capital gains trigger AMT?
Generally no — long-term capital gains and qualified dividends are taxed at the same 0/15/20% rates under AMT as under regular tax. However, large capital gains can indirectly push you into AMT by exhausting the exemption (which phases out above $626K single / $1.25M MFJ AMTI). For very-high-income households, a $5 million capital gain can phase out the exemption entirely even though the gain itself is taxed at 20% in both systems.
Should I exercise ISOs to fill the AMT exemption?
Many tax advisors recommend "AMT-aware" ISO exercising — exercising just enough each year to fully use your AMT exemption without triggering AMT. For a single filer with no other preference items, you could exercise approximately $88,100 of ISO bargain element per year before AMT begins. This staggered approach maximizes long-term capital gains conversion (qualifying disposition saves up to 17 percentage points vs ordinary income) without writing AMT checks. Run yearly with our ISO AMT Calculator before deciding.