The Alternative Minimum Tax (AMT) is a parallel federal tax system designed to ensure that high-income taxpayers pay at least a minimum amount of tax. You calculate both your regular income tax and the tentative minimum tax (TMT), and pay whichever is higher. Common AMT triggers include ISO stock option exercises, large state and local tax deductions, and home equity interest. The 2025 exemption is $88,100 (single) or $137,000 (married filing jointly).
Income & Deductions
From line 15 of Form 1040 (after standard/itemized deductions)
AMT Preference Items & Add-Backs
FMV minus exercise price for ISOs exercised this year
Added back for AMT (capped at $10,000 under current TCJA rules)
Accelerated depreciation, depletion, tax shelter losses, etc.
From your regular tax table or Form 1040, before any credits
AMT Calculation (2025)
Disclaimer: This is an estimate based on 2025 AMT parameters. It does not account for all AMT preference items, long-term capital gains treatment under AMT, or state AMT. Always consult a tax professional before making decisions.
How to Use the AMT Calculator
The Alternative Minimum Tax (AMT) is a shadow tax system that runs parallel to the regular income tax. You calculate your tax both ways and pay whichever is higher. The 2025 AMT exemption provides significant protection for most taxpayers, but those with ISO stock options, high SALT deductions, or other preference items can still trigger AMT liability. This AMT calculator estimates your 2025 federal exposure in minutes.
Step 1: Enter Your Regular Taxable Income and Tax
Enter your regular taxable income — this is from line 15 of Form 1040, after subtracting either the standard deduction or your itemized deductions. Also enter your regular income tax before credits — this is the amount from the tax tables, before applying the child tax credit, education credits, or other credits. This is used to determine whether AMT applies (AMT is the excess of TMT over regular tax).
Step 2: Add AMT Preference Items
The most common AMT add-backs are: (1) ISO exercise spread — the difference between the fair market value and exercise price of incentive stock options exercised this year; (2) SALT deduction — state and local taxes you deducted (currently capped at $10,000 under TCJA, but fully added back for AMT); (3) non-acquisition home equity interest — interest on home equity loans not used to buy or improve your home; and (4) other preference items like accelerated depreciation, depletion allowances, or tax shelter losses.
Understanding the AMT Exemption Phase-Out
The AMT exemption ($88,100 single / $137,000 MFJ for 2025) phases out at 25 cents per dollar of AMTI above $626,350 (single) or $1,252,700 (MFJ). For very high incomes, the exemption may be completely phased out, meaning the full AMTI is subject to AMT rates. The AMT has two rates: 26% on the first $239,900 of net AMTI and 28% on amounts above that.
The AMT Credit Carryforward
If you pay AMT this year, you generally earn an AMT credit (also called the minimum tax credit) equal to the AMT paid. This credit can be carried forward indefinitely and used in future years when your regular tax exceeds your tentative minimum tax — effectively recovering the AMT you paid. For ISO exercises specifically, this credit can be valuable when you later sell the stock and no longer trigger AMT.
FAQ
Is this AMT calculator free?
Yes, completely free with no signup required. All calculations run locally in your browser — your data is never sent to any server.
What is the Alternative Minimum Tax (AMT)?
The AMT is a parallel federal tax system that prevents high-income taxpayers from using too many deductions and preferences to eliminate their regular tax liability. You calculate both your regular tax and the tentative minimum tax (TMT), then pay whichever is higher. If the TMT exceeds regular tax, the difference is your AMT.
What are the 2025 AMT exemption amounts?
For 2025, the AMT exemption is $88,100 for single filers and $137,000 for married filing jointly. The exemption phases out at a rate of 25 cents per dollar of AMTI above $626,350 (single) or $1,252,700 (married filing jointly). These amounts are inflation-adjusted annually.
Why does exercising ISOs trigger AMT?
When you exercise Incentive Stock Options (ISOs), you don't pay ordinary income tax on the spread (fair market value minus exercise price). However, the spread IS an AMT preference item — it gets added to your regular income to calculate AMTI. This can create significant AMT liability in years when you exercise large ISO grants.
What is the AMT tax rate?
The AMT has two rates: 26% on AMTI up to $239,900 (single) or $239,900 (MFJ, not inflation-adjusted at different thresholds) and 28% on AMTI above that threshold. Most taxpayers subject to AMT are in the 26% bracket.
What is an AMT credit carryforward?
When you pay AMT, you generally receive an AMT credit (minimum tax credit) that can be carried forward to future tax years. In years when your regular tax exceeds your tentative minimum tax, you can use the AMT credit to reduce your regular tax liability. This means AMT paid on ISO exercises often gets recovered in future years when you sell the shares.
What is AMTI and how is it calculated?
Alternative Minimum Taxable Income (AMTI) starts with your regular taxable income and adds back AMT preference items and adjustments: ISO exercise spread, state and local tax deduction (SALT), home equity loan interest not used for acquisition, and certain itemized deductions. The AMT exemption is then subtracted to get the net AMTI subject to AMT rates.
Is this calculator accurate for tax filing?
This tool provides a solid estimate based on 2025 AMT parameters, but does not account for all AMT preference items, complex adjustments, or state AMT. Always consult a tax professional, particularly if you have ISO exercises or significant AMT exposure.