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Category Taxes & Contributions

Filing Status

Regular Taxable Income ($)

AMT Preference & Adjustment Items

SALT Deduction Add-back ($)

ISO Exercise Spread ($)

Private Activity Bond Interest ($)

Depreciation Adjustment ($)

Other Adjustments / Preferences ($)

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About

The Alternative Minimum Tax (AMT) is a parallel tax system under IRC § 55-59. It exists to ensure taxpayers who claim substantial deductions, exemptions, or preference items under the regular tax code still pay a minimum effective rate. Miscalculating AMT exposure can result in underpayment penalties (IRC § 6654), interest accrual, and surprise liabilities at filing. The computation begins with regular taxable income, adds back specific preference items (P) and adjustments (A), subtracts a phased-out exemption (E), and applies a two-bracket rate structure (26% / 28%) to derive the tentative minimum tax.

This calculator uses 2024 IRS parameters including updated exemption amounts, phase-out thresholds, and the 28% breakpoint. It approximates AMT liability assuming all inputs represent properly classified items per IRS Form 6251. The tool does not handle foreign tax credits, qualified dividends at preferential AMT rates, or net operating loss adjustments. For complex situations involving incentive stock options (ISOs) or tax-exempt interest from private activity bonds, consult a CPA after using this for initial exposure analysis.

Formulas

The Alternative Minimum Taxable Income (AMTI) aggregates regular taxable income with disallowed deductions and preference items:

AMTI = TI + P + A

where TI = regular taxable income, P = total preference items (e.g., ISO spread, private activity bond interest), and A = total adjustments (e.g., SALT add-back, depreciation difference).

The exemption amount E is reduced when AMTI exceeds the phase-out threshold T:

E = max(0, E₀ − 0.25 × max(0, AMTI − T))

where E₀ = base exemption amount for the filing status and T = phase-out threshold.

The AMT base (B) and tentative minimum tax (TMT) use a two-bracket rate structure with breakpoint K:

B = max(0, AMTI − E)

TMT = {

0.26 × B if B ≤ K0.26 × K + 0.28 × (B − K) if B > K

The final AMT owed is the excess of tentative minimum tax over regular tax RT:

AMT = max(0, TMT − RT)

where RT is computed via the standard 2024 progressive bracket schedule (10% through 37%) applied to TI.

Reference Data

Parameter (2024)	Single	Married Filing Jointly	Married Filing Separately
AMT Exemption Amount	$85,700	$133,300	$66,650
Phase-out Threshold	$609,350	$1,218,700	$609,350
Exemption Fully Phased Out At	$952,150	$1,751,900	$875,950
28% Rate Breakpoint	$232,600	$232,600	$116,300
AMT Rate (First Bracket)	26%
AMT Rate (Second Bracket)	28%
Common Preference: ISO Spread	Difference between FMV and exercise price at exercise
Common Adjustment: SALT Deduction	State/local tax deduction added back in full
Common Adjustment: Medical Expenses	Difference between regular & AMT floor (7.5% AGI for both in 2024)
Common Adjustment: Tax-Exempt Interest	Interest from private activity bonds (PABs)
Common Adjustment: Depreciation	Difference between MACRS and ADS depreciation methods
Common Adjustment: Home Equity Loan Interest	Interest not used for home improvement added back
Regular Tax: 10% Bracket (Single)	$0 - $11,600	$0 - $23,200	$0 - $11,600
Regular Tax: 12% Bracket	$11,601 - $47,150	$23,201 - $94,300	$11,601 - $47,150
Regular Tax: 22% Bracket	$47,151 - $100,525	$94,301 - $201,050	$47,151 - $100,525
Regular Tax: 24% Bracket	$100,526 - $191,950	$201,051 - $383,900	$100,526 - $191,950
Regular Tax: 32% Bracket	$191,951 - $243,725	$383,901 - $487,450	$191,951 - $243,725
Regular Tax: 35% Bracket	$243,726 - $609,350	$487,451 - $731,200	$243,726 - $365,600
Regular Tax: 37% Bracket	$609,351+	$731,201+	$365,601+

Frequently Asked Questions

The exemption reduces by $0.25 for every $1 that your AMTI exceeds the phase-out threshold. For single filers, the $85,700 exemption begins phasing out at $609,350 of AMTI and reaches zero at $952,150. For married filing jointly, the $133,300 exemption phases out starting at $1,218,700. This means high-AMTI taxpayers effectively pay AMT on their entire AMT base with no exemption shelter.

Under IRC § 56(b)(3), the spread between the fair market value and the exercise price of ISOs at exercise is a preference item for AMT purposes, even though it is not recognized as income for regular tax until disposition. A large ISO exercise in a single year can create substantial AMTI, pushing the taxpayer above the exemption phase-out and generating significant AMT liability. Spreading exercises across multiple tax years is a common mitigation strategy.

Preferences (IRC § 57) are items that receive favorable treatment under the regular tax but must be added back for AMT. Examples include private activity bond interest and certain depletion deductions. Adjustments (IRC § 56) are items where the AMT calculation method differs from the regular method, such as depreciation (ADS vs. MACRS) and the state/local tax (SALT) deduction. Both increase AMTI, but adjustments can sometimes be negative (reducing AMTI) if the AMT method produces a smaller deduction.

Yes, but indirectly. Under current law (TCJA through 2025), the SALT deduction is capped at $10,000 for regular tax. Since the entire SALT deduction is disallowed for AMT, the AMT add-back equals whatever SALT amount was actually deducted on the regular return (up to $10,000). Before TCJA, taxpayers with very large SALT deductions were the primary AMT population. The cap has reduced AMT exposure for many upper-middle-income filers.

Yes. AMT paid due to timing differences (deferral items like ISO exercises or depreciation adjustments, as opposed to exclusion items like SALT) generates a Minimum Tax Credit (MTC) under IRC § 53. This credit can offset regular tax liability in future years when regular tax exceeds tentative minimum tax. The MTC does not expire. This calculator does not compute MTC carryforwards, but if your AMT is driven by timing items, track the credit on Form 8801.

Married Filing Separately (MFS) receives the least favorable AMT parameters: the exemption is half of MFJ ($66,650), the phase-out threshold equals the single filer threshold ($609,350), and the 28% rate breakpoint is halved to $116,300. This means MFS filers hit the higher AMT rate sooner and lose their exemption faster relative to their income, making AMT exposure significantly higher per dollar of AMTI compared to MFJ.