What is AMT?
The Alternative Minimum Tax (AMT) is a separate tax from regular income tax. It is caused by two types of adjustments and preferences—deferral items and exclusion items.
Deferral items (for example, depreciation) generally don't cause a permanent difference in taxable income over time. Exclusion items (for example, the standard deduction, certain tax-exempt interest, depletion, section 1202 exclusion, adjustments related to exclusion items), on the other hand, do cause a permanent difference.
AMT is calculated on Form 6251.
Who does AMT apply to?
AMT applies to higher-income taxpayers who benefit from a lower regular tax due to certain kinds of income being subject to a lower tax rate as well as from certain deductions. The AMT sets a limit on those benefits. If the tax benefits would reduce total tax below the AMT limit, the taxpayer must pay the higher AMT amount. The AMT has two tax brackets: 26% and 28%.
AMT and the Tax Cuts & Jobs Act
The Tax Cuts and Jobs Act of 2017 made significant revisions to AMT, including a higher exemption amount, doubling the exemption phase-out, and reducing or repealing certain preference items. These revisions are set to expire after 2025 unless extended by Congress.
AMT Exemptions, 28% Bracket Thresholds, and Exemption Phaseout Thresholds
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
| Exemption | |||||||
| Single | $70,300 | $71,700 | $72,900 | $73,600 | $75,900 | $81,300 | $85,700 |
| MFJ | $109,400 | $111,700 | $113,400 | $114,600 | $118,100 | $126,500 | $133,300 |
| HOH | $70,300 | $71,700 | $72,900 | $73,600 | $75,900 | $81,300 | $85,700 |
| MFS | $54,700 | $55,850 | $56,700 | $57,300 | $59,050 | $63,250 | $66,650 |
| QSS | $109,400 | $111,700 | $113,400 | $114,600 | $118,100 | $126,500 | $133,300 |
| 28% bracket threshold | |||||||
| Single | $191,100 | $194,800 | $197,900 | $199,900 | $206,100 | $220,700 | $232,600 |
| MFJ | $191,100 | $194,800 | $197,900 | $199,900 | $206,100 | $220,700 | $232,600 |
| HOH | $191,000 | $194,800 | $197,900 | $199,900 | $206,100 | $220,700 | $232,600 |
| MFS | $95,500 | $97,400 | $98,950 | $99,950 | $103,050 | $110,350 | $116,300 |
| QSS | $191,100 | $194,800 | $197,900 | $199,900 | $206,100 | $220,700 | $232,600 |
| Exemption phaseout threshold | |||||||
| Single | $500,000 | $510,300 | $518,400 | $523,600 | $539,900 | $578,150 | $609,350 |
| MFJ | $1,000,000 | $1,020,600 | $1,036,800 | $1,047,200 | $1,079,800 | $1,156,300 | $1,218,700 |
| HOH | $500,000 | $510,300 | $518,400 | $523,600 | $539,900 | $578,150 | $609,350 |
| MFS | $500,000 | $510,300 | $518,400 | $523,600 | $539,900 | $578,150 | $609,350 |
| QSS | $1,000,000 | $1,020,600 | $1,036,800 | $1,047,200 | $1,079,800 | $1,156,300 | $1,218,700 |
When is AMT required?
If the taxpayer received or claimed any of the following items in the tax year, Form 6251 must be completed:
- Accelerated Depreciation
- Tax exempt interest from private activity bonds
- Net operating loss deduction
- Alternative fuel vehicle refueling property tax
- Qualified electric vehicle credit
- Foreign tax credit
- Net qualified disaster loss and the return is reporting the standard deduction on Schedule A
- Section 1202 exclusion
- Amortization of pollution-control facilities or depletion
- Any general business credit on Form 3800 if either line 6 (in Part I) or line 25 is greater than zero
- Credit for prior year minimum tax
- Investment interest expense reported on Form 4952
- Income (or loss) from tax-shelter farm activities or passive activities, partnerships, S corporations, or activities for which the taxpayer isn't at risk
- Income from long-term contracts not figured using the percentage-of-completion method
- Intangible drilling, circulation, research, experimental or mining costs
- AMT adjustments from an estate, trust, electing large partnership, or cooperative
- Stock by exercising an incentive stock option and the stock was not disposed in the same year
The rules for AMT are more complex than the rules for regular income tax. TaxSlayer Pro will calculate AMT if it is owed.
Additional Information:
IRS: Instructions for Form 6251, Alternative Minimum Tax - Individuals