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The alternative minimum tax is a second calculation of what you owe, run in parallel with the ordinary one, and you pay whichever is higher. For 2026 it exempts the first $90,100 of alternative minimum taxable income for a single filer and $140,200 for a couple filing jointly, and the rates above that are 26% and 28%. The exemption itself is withdrawn above $500,000 and $1,000,000.
Reviewed by Dylan, finance analyst. Figures last checked against the source publications on 2026-09-28.
| Exemption — unmarried individuals | $90,100 | |
|---|---|---|
| Exemption — joint returns and surviving spouses | $140,200 | |
| Exemption — married filing separately | $70,100 | |
| Exemption — estates and trusts | $31,400 | |
| AMT rates | 26% and 28% | Two rates only, not seven |
| Where the 28% rate starts | $244,500 | Of AMT income above the exemption; $122,250 filing separately |
| Joint returns and surviving spouses | From $1,000,000 | Fully gone at $1,280,400 |
|---|---|---|
| Unmarried individuals | From $500,000 | Fully gone at $680,200 |
| Married filing separately | From $500,000 | Fully gone at $640,200 |
| Estates and trusts | From $104,800 | Fully gone at $167,600 |
The AMT does not add to your ordinary tax bill. It replaces it when it is larger. You compute alternative minimum taxable income under its own rules, subtract the exemption, apply 26% up to $244,500 and 28% above, and compare the result with the ordinary calculation. The higher figure is what you owe.
Because it is a separate system with a broader base and a flatter, lower rate schedule, the people it catches are not simply the highest earners. They are people whose ordinary tax is unusually low relative to their economic income — which is precisely what it was designed to catch.
Above $500,000 for a single filer and $1,000,000 for a couple, the exemption is withdrawn at 25 cents for every additional dollar of AMT income. Each extra dollar therefore adds $1.25 to the taxed amount, and at 28% that is an effective marginal rate of 35% inside the phase-out band.
The band is finite: the exemption is fully gone at $680,200 for a single filer and $1,280,400 for a couple, and above that the marginal rate drops back to 28%. This is one of the few places in the code where the marginal rate falls as income rises.
Exercising incentive stock options is the classic cause. The spread between the exercise price and the market value is not ordinary income in the year of exercise, but it is counted for AMT — so a large exercise can generate a substantial tax bill on stock that has not been sold and may since have fallen.
Other common items are private activity municipal bond interest, which is tax-free for ordinary purposes but not for AMT, large depreciation differences, and certain exercises of employee stock in a year with otherwise modest income.
AMT paid on a timing difference such as an ISO exercise can generate a credit usable in later years. It is a deferral of tax rather than a permanent extra cost — but the cash leaves in the earlier year regardless.
These are the federal figures from the IRS's annual inflation adjustments for 2026, applying to income earned in 2026 and the return filed in 2027. The exemptions and thresholds are indexed, which is why far fewer people reach the AMT than did before indexing was made permanent.
This is general information rather than tax advice. AMT interacts with stock compensation, state taxes and credits in ways that turn on the specific facts, and an ISO exercise in particular is worth modelling with a tax professional before it happens rather than after.
The 2026 exemption is $90,100 for a single filer, $140,200 for a married couple filing jointly, $70,100 for married filing separately and $31,400 for estates and trusts.
There are two: 26% on alternative minimum taxable income above the exemption up to $244,500, and 28% above that. The 28% threshold is $122,250 for married filing separately.
From $500,000 of AMT income for a single filer and $1,000,000 for a couple, at 25 cents per dollar. The exemption is fully gone at $680,200 and $1,280,400.
Exercising incentive stock options is the classic cause, because the spread at exercise counts for AMT though not for ordinary tax. Private activity municipal bond interest and large depreciation differences are other common items.
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Figures sourced from IRS — Revenue Procedure 2025-32, sections 4.10 and 4.11, IRS — Topic no. 556, Alternative minimum tax.
Figures on this page apply to the years stated beside them and were last checked against the source publications on 2026-09-28 by Dylan, finance analyst. This page is general information, not financial, tax or legal advice.