Alternative Minimum Tax (AMT)

Full explanation

The AMT is a separate tax calculation that runs alongside the regular tax system. It adds back certain deductions (state and local taxes, some itemized deductions, incentive stock option spreads) and applies a flat rate structure: 26% on the first $248,300 of AMT income and 28% above that (2026, married filing jointly). You pay whichever is higher — regular tax or AMT. For 2026, the AMT exemption is $88,100 (single) and $137,000 (married filing jointly), phasing out at $622,050 and $1,243,700 respectively. The AMT primarily affects taxpayers with high state/local taxes, large incentive stock option exercises, or certain tax preference items.

Source: IRS Form 6251 — Alternative Minimum Tax