The AMT was designed to ensure wealthy taxpayers pay a minimum amount of tax. Could it affect you? Learn how it works.

Understanding the Alternative Minimum Tax

What Is the AMT?

The Alternative Minimum Tax is a parallel tax system that ensures high-income taxpayers pay at least a minimum amount of tax, regardless of deductions.

How AMT Works

Calculate regular income tax
Calculate AMT (using different rules)
Pay whichever is higher

AMT Exemptions (2025)

Single: $88,100
Married Filing Jointly: $137,000
Phase-out begins at higher income levels

What Triggers AMT?

High income with large itemized deductions
Exercising incentive stock options (ISOs)
Significant depreciation deductions
Large tax-exempt interest income

AMT Tax Rates

26% on AMT income up to $220,700
28% on AMT income over $220,700

Strategies to Minimize AMT

Time the exercise of stock options
Avoid prepaying state taxes in years you may owe AMT
Manage your depreciation deductions

Concerned about AMT? Our experts can run AMT projections and help you plan accordingly.

Understanding Alternative Minimum Tax (AMT)