Alternative Minimum Tax (AMT) Calculator
Estimate your Alternative Minimum Tax liability based on regular income and AMT preference items.
Understanding the AMT
The Alternative Minimum Tax (AMT) is a parallel tax system in the United States designed to ensure that high-income individuals, corporations, and trusts pay at least a minimum amount of tax, regardless of deductions, credits, or exemptions.
How AMT Works
Taxpayers must calculate their tax liability under both the regular tax system and the AMT system. You pay the higher of the two amounts. The AMT calculation adds back certain "preference items" (like state and local taxes, or ISO stock options) that are normally deductible.
Worked Example
- Regular Taxable Income: $250,000
- AMT Preference Add-backs: $50,000
- AMT Income (AMTI) = $300,000.
- Subtract the AMT Exemption (varies by filing status) to get Taxable AMT.
- Apply the AMT rates (26% and 28%) to find the Tentative Minimum Tax.
Frequently Asked Questions
Who is most likely to be hit by the AMT?
Taxpayers with income over $200,000 who live in high-tax states (since state/local taxes are added back), or tech employees who exercise Incentive Stock Options (ISOs) without selling them.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.