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    Updated Reviewed for 2026 tax yearIRS-sourced
    OBBBA §70107 · Effective 2026

    2026 Alternative Minimum Tax Guide

    The AMT phase-out was reset to 2018 levels and the phase-out rate doubled. Here's what high-income households need to know.

    OBBBA §70107 made the most consequential AMT change in nearly a decade. We've reviewed Rev. Proc. 2025-32 and IR-2025-103 to translate the new mechanics into clear planning rules.

    2×
    faster exemption phase-out vs. 2025
    About Our Editorial Process

    What are the 2026 AMT exemption and phase-out amounts?

    For 2026, the AMT exemption is $90,100 (single) and $140,200 (MFJ). The phase-out begins at $500,000 / $1,000,000 and reduces the exemption by 50¢ for every $1 above — twice the 2025 rate.

    • •Exemption: $90,100 single / $140,200 MFJ
    • •Phase-out start: $500,000 single / $1,000,000 MFJ (was $626,350 / $1,252,700 in 2025)
    • •Phase-out rate: 50% (was 25%)
    • •Rates: 26% on AMTI up to $244,500, 28% above
    Run the AMT Calculator

    AMT was designed in 1969 to catch 155 rich people who paid no tax. Sixty years later, with OBBBA's faster exemption phase-out, it's catching mid-six-figure earners with ISOs or large SALT deductions again. Knowing whether you're at risk before the year ends is the entire game.

    Real-world scenario

    Senior engineer exercises $400K of ISOs, holds for QSBS treatment

    Strike $1, FMV $9, 50,000 shares exercised and held = $400K bargain element. Invisible to regular tax; fully counted for AMT. With OBBBA's faster exemption phase-out for MFJ filers above $1M income, AMT can hit $90K+ on paper. Stock drops 60% next year? Still owe the AMT — though they generate a multi-year AMT credit (Form 8801) to recover later.

    The part most people miss

    Exercise ISOs early in the year, not in December. If the stock craters, a sale before December 31 of the exercise year (a disqualifying disposition) removes the AMT adjustment and taxes the bargain element as ordinary income, limited to your actual gain. A January exercise leaves eleven months to decide; a December exercise leaves days.

    2026 AMT at a Glance

    Single / HOH exemption$90,100
    MFJ exemption$140,200
    MFS exemption$70,100 (AMT income add-on above $640,200)
    Single phase-out start$500,000
    MFJ phase-out start$1,000,000
    Phase-out rate50% (OBBBA §70107)
    26% / 28% taxable-excess breakpoint$244,500 ($122,250 MFS)
    FormIRS Form 6251

    Worked Example: MFJ at $1.25M AMTI

    AMTI$1,250,000
    Phase-out start (MFJ)$1,000,000
    Excess$250,000
    Exemption reduction (50%)−$125,000
    Starting exemption$140,200
    Allowed exemption$15,200
    Taxable AMTI$1,234,800
    Tentative minimum tax before other Form 6251 adjustments$340,854

    Illustrative arithmetic assumes all taxable excess uses the ordinary 26%/28% schedule and no capital-gain computation or foreign tax credit. It is not AMT owed; Form 6251 still compares tentative minimum tax with regular tax.

    2026 AMT Planning Checklist

    • Project AMTI before exercising ISOs — the bargain element is a classic AMT preference
    • Follow the AMT treatment for itemized deductions, depreciation, passive activities, and other listed adjustments
    • Review private activity bond holdings (interest is an AMT preference)
    • Consider Roth conversions in years when you're already in AMT (regular rates often higher anyway)
    • If you've paid AMT in prior years, track your AMT credit on Form 8801

    Frequently Asked Questions

    Source documents

    Not sure if the 2026 AMT hits you?

    Ask Taxly with your numbers — get an instant projection grounded in Rev. Proc. 2025-32 and the OBBBA §70107 changes.

    Sources & References

    Primary references used for this content

    Form 6251

    Alternative Minimum Tax — Individuals

    AMT exemption, phase-out, and tentative minimum tax

    View on irs.gov

    IRC §55

    Alternative minimum tax imposed

    AMT structure and exemption mechanics

    View on law.cornell.edu

    Rev. Proc. 2025-32

    2026 Inflation Adjustments

    Official 2026 brackets, deductions, and thresholds

    View on irs.gov

    ✓3 primary sources; links re-checked on a weekly rotation by the source watcher