Alternative Minimum Tax.

In plain English

The alternative minimum tax (AMT) is a second way of figuring your federal tax that runs alongside the regular system to make sure people with high incomes and many deductions still pay a baseline amount. It starts from your income, adds back certain deductions and tax breaks, subtracts a special AMT exemption, and applies its own rates. You pay whichever is higher, the regular tax or the AMT. Recent law changes raised the exemption but also sped up how fast it phases out at high incomes, so the figures move from year to year and are worth confirming on irs.gov.

01Why it matters

Certain moves, like exercising incentive stock options or claiming large state-tax deductions, can quietly trigger AMT and a surprise bill, so it is worth a check before big year-end decisions.

02The math, step by step

You run your regular tax and it comes to $30,000. You also run the AMT calculation. For 2026 the AMT exemption is $90,100 for single filers and $140,200 for married filing jointly, and it starts to phase out at $500,000 of AMT income for singles and $1,000,000 for joint filers (IRS, tax year 2026). Suppose your AMT figure comes to $34,000. You pay the higher number, $34,000. The extra $4,000 is your AMT.

03What this is NOT

04Receipts

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