The alternative minimum tax widens what counts as income and disallows the write-offs many taxpayers take for granted. For example, under AMT rules, you can’t deduct state and local taxes—income, real estate, or personal property taxes—even though they’re deductible on a regular return. Business assets are written off through slower depreciation, and interest from private activity bonds, which is normally tax-exempt, gets pulled back in as income. If you exercise incentive stock options and don’t sell the shares in the same year, the spread between what you paid and the fair market value of the stock counts as income under the AMT, even though you haven’t taken any cash off the table.
The history of the AMT
The AMT dates to 1969, when Congress learned that a small group of very wealthy households had paid no federal income tax at all. In response, legislators created a backstop tax aimed squarely at them. However, the exemption wasn’t tied to inflation, so for decades, ordinary raises pushed middle-income families into a tax meant for the rich. Congress fixed that in 2013, letting the exemption rise with inflation each year, and middle-income filers are no longer the ones at risk. Today the AMT mostly catches people who earn a high income, live in a high-tax state, or exercise incentive stock options without selling the shares.
Are you subject to the AMT?
A high income alone doesn’t make you subject to the AMT. What matters is whether the items the AMT counts against you push the AMT tax above your regular one. To find out where you stand, fill out IRS Form 6251. If the tax calculated there is higher than the tax on your regular return, the AMT figure is what you pay. If it’s lower, you simply pay your regular tax.
What changed for 2026?
The 2025 One Big Beautiful Bill Act kept in place the large exemptions that have shielded most people from the AMT: $90,100 for single filers and $140,200 for married couples filing jointly in 2026. The catch is what happens above those income levels. Once a single filer earns more than $500,000 or a couple earns more than $1 million, that exemption starts to shrink—and it now shrinks twice as fast as it used to, by 50 cents for every extra dollar earned. The smaller your exemption, the more income goes into the AMT calculation—and the likelier that figure tops your regular tax bill. Households earning roughly $500,000 to $1.3 million, many of whom haven’t thought about the AMT in years, may owe it again.
What can you do about it?
Depending on your income and deductions, you may be affected by the AMT one year and not the next. In that case, you may want to accelerate or delay certain transactions—shifting the sale of an asset with a large gain into another year, for example, so you don’t trigger the tax. Spreading stock option exercises over several years can work the same way.
Final thoughts
As with so many tax situations, the details get complicated quickly and the rules change over time. Rather than assuming that you will not be subject to the AMT this year, run the numbers before year’s end. If you have questions or need assistance, please contact the SEK tax team using the form on this page for guidance based on your situation.
© 2026
