AMT Calculator (Alternative Minimum Tax)

The Alternative Minimum Tax is a parallel tax system designed to ensure high-income taxpayers can't use too many deductions to escape taxation. You compute regular tax AND AMT, then pay whichever is higher. Under TCJA (2018-2026), only ~200K filers paid AMT annually (vs ~5M pre-TCJA) because the exemption was raised sharply and SALT/personal-exemption add-backs were eliminated.

The AMT exemption drops dramatically - from ~$87K single / $135K MFJ in 2026 back to ~$70K / $109K in 2027. Personal exemptions return as AMT add-backs. SALT becomes deductible for regular tax but added back for AMT. The CBO estimates 5+ million additional filers will pay AMT starting 2027. ISO exercises and high-state-tax residents are most at risk.

Either (1) exercise in a year with low other AMT preferences and limited bargain element so the spread fits under the exemption; (2) exercise + same-day sale (becomes ordinary income at exercise, no AMT preference but loses LTCG treatment); (3) split exercises across multiple tax years; or (4) wait until post-sunset when exemption is lower but planning is more predictable. AMT credit can be recovered in future low-AMT years.

The AMT exemption phases out 25¢ per dollar of AMTI above $626,350 single / $1,252,700 MFJ in 2026. Once fully phased out, the entire AMTI is exposed to 26%/28% AMT rates. Result: there's a "sweet spot" around $250K-$500K AMTI where AMT bites the hardest as a fraction of total tax.