AMT Calculator
Calculate your Alternative Minimum Tax liability for 2025
What is the Alternative Minimum Tax (AMT)?
The AMT is a parallel tax system ensuring high-income taxpayers pay a minimum amount of tax. It adds back certain deductions (the standard deduction, or state and property taxes if you itemize) and preferences such as the bargain element of ISO shares still held at year-end, then applies rates of 26% and 28% after an exemption. For 2025, the AMT exemption is $88,100 (single) or $137,000 (MFJ).
- 2025 AMT exemption (Single): $88,100
- 2025 exemption phase-out (Single): reduced by 25% of AMT income above $626,350
- 2025 AMT rates (Single): 26% on the first $239,100 of AMT taxable income, then 28%
- Qualified dividends and long-term capital gains keep their 0%, 15% or 20% rates under AMT (Form 6251 Part III)
- Common triggers: large SALT deductions, incentive stock options (ISOs) exercised and still held at year-end
Source:IRS Form 6251 Instructions
AMT is the tax most people only hear about after it bites them — usually in a year they exercised ISOs or had a big SALT deduction. The rules feel arbitrary because they are: it's a parallel system designed in 1969, patched ever since.
Real-world scenario
Tech employee exercises $300K of ISOs in a hot stock year
A senior engineer at a pre-IPO company exercises 50,000 ISOs at a $1 strike, FMV $7. That's $300,000 of bargain element — invisible to regular tax, but fully counted for AMT. Even with the full married-filing-jointly exemption ($137,000 for 2025, $140,200 for 2026), AMT can hit $60K+ on a paper gain she hasn't sold. If the stock drops next year, she still owes the AMT.
The part most people miss
AMT paid on ISO bargain element creates an AMT credit (Form 8801) you carry forward and use in years your regular tax exceeds AMT. Most ISO holders forget to claim it and leave five figures on the table. Track it every year you trigger AMT.
What is the Alternative Minimum Tax?
The AMT is a parallel tax system that ensures high-income taxpayers pay at least a minimum amount of tax. It adds back certain deductions (like state taxes, property taxes, and ISO exercises) and applies rates of 26% and 28% after an exemption amount.
Basic Information
2025 AMT exemptions per Rev. Proc. 2024-40: $88,100 single / $137,000 MFJ.
AMT taxes these at the same 0%, 15% or 20% rates as the regular tax (Form 6251 Part III).
Your AMT foreign tax credit is the same as your foreign tax credit if you claimed it without Form 1116.
AMT Add-Back Items
These deductions are added back when calculating AMT
AMT doesn't allow the standard deduction, so your $15,750 is added back (Form 6251 line 2a).
Common AMT Triggers
🏠 High SALT Deductions
Large state/local tax and property tax deductions are completely disallowed for AMT.
📈 Incentive Stock Options
The "bargain element" (fair market value at exercise minus the exercise price) is added to AMT income if you still hold the shares at year-end.
👨👩👧👦 Large Families
Personal exemptions (when applicable) are disallowed for AMT purposes.
🏦 Private Activity Bonds
Interest from certain municipal bonds becomes taxable under AMT.
Your regular tax exceeds tentative minimum tax
AMT Calculation
2025 AMT Exemptions
Disclaimer: This calculator provides estimates for educational purposes only. AMT calculations can be complex—consult a tax professional for your specific situation.
Sources & References
Primary references used for this content
Your Federal Income Tax
For Individuals
View on irs.gov
Alternative Minimum Tax—Individuals
AMT calculation form
View on irs.gov
Instructions for Form 6251
AMT calculation guidance
View on irs.gov
2025 Tax Brackets and Adjustments
Annual inflation adjustments
View on irs.gov
✓4 primary sources; links re-checked on a weekly rotation by the source watcher
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Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.