How does SALT affect AMT in 2026?

SALT deductions are completely disallowed under AMT. The OBBBA SALT cap is $40,400, with a 30% phase-down above $505K MAGI. When you itemize SALT for regular tax, the entire deduction gets added back to AMTI. High-tax state residents (CA, NY, NJ) are especially at risk because OBBBA's faster exemption phase-out means AMT triggers at lower income levels.

Alternative Minimum Tax (AMT) Calculator

Q: What are the 2026 AMT exemption amounts under OBBBA?

Under OBBBA section 55(d), the 2026 AMT exemptions are: Single $90,100, Married Filing Jointly $140,200, Married Filing Separately $70,100, Head of Household $90,100. The exemption phases out at 50 cents per dollar of AMTI above $500,000 (single) or $1,000,000 (MFJ).

Q: How do ISO exercises trigger AMT?

When you exercise ISOs, the spread between FMV and strike price is an AMT preference item under IRC section 56(b)(3). Each dollar of ISO spread that pushes you into AMT costs 26-28 cents in AMT tax. Under OBBBA's faster exemption phase-out, AMT triggers at lower income levels, making ISO exercise planning more important.

Q: What is the AMT credit and can I recover AMT paid?

AMT paid due to timing items like ISO exercises generates an AMT credit (Form 8801). In future years, if your regular tax exceeds your tentative minimum tax, you can use this credit: AMT credit usable = min(prior AMT paid, regular tax minus TMT). The credit carries forward indefinitely until fully used.

Check if you owe AMT under OBBBA's doubled exemption phase-out (50%, up from 25%), plan ISO exercises to minimize AMT exposure, and find your AMT breakpoints. 2026 rates: 26%/28%, exemptions $90,100/$140,200, phase-out starts at $500K/$1M.

Check if the Alternative Minimum Tax applies under OBBBA's new 50% flat rate

Gross income

W-2 wages, 1099, business income, investments

Filing status

State & local tax (SALT)

State income tax + property tax. Cap: $40,400 (OBBBA). Fully disallowed for AMT.

ISO exercise spread

(FMV - exercise price) x shares. $0 if no ISOs.

Private activity bond interest

Tax-exempt interest from private activity bonds

Other AMT preferences

Depreciation differences, intangible drilling costs, etc.

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How to Use This Calculator

AMT Check tab

Enter your gross income, filing status, and SALT deduction. The calculator computes your regular tax vs. tentative minimum tax (26%/28% AMT rates) and tells you whether you owe AMT. OBBBA doubled the exemption phase-out rate to 50%. Expand "More options" for ISO exercise spread, private activity bond interest, and other AMT preferences.

ISO Exercise tab

Enter your stock option details: number of shares, exercise (strike) price, and FMV at exercise. See the AMT impact at different exercise levels, find the maximum shares you can exercise without triggering AMT, and see the AMT credit generated if you exercise more. OBBBA's faster phase-out means AMT kicks in sooner for high-income ISO holders.

AMT Planning tab

Enter your expected income and deductions. See AMT breakpoints: at what income AMT kicks in, how much SALT you can claim before triggering AMT, and the optimal ISO exercise amount per year. Use this tab to plan multi-year strategies for minimizing AMT under OBBBA.

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The Formula (2026 OBBBA)

AMT is a parallel tax system. You calculate both regular tax and tentative minimum tax, then pay whichever is higher. OBBBA changed AMT dramatically for 2026:

AMTI = Regular Taxable Income + AMT Preference Items

Preference items: SALT deduction + ISO exercise spread + PAB interest + other

AMT Exemption (OBBBA §55(d)):
  Single: $90,100 | MFJ: $140,200 | MFS: $70,100
  Phase-out begins: $500K single / $1M MFJ (lowered from $626K/$1.25M)
  Phase-out: 50 cents per dollar above threshold (OBBBA doubled from 25 cents)

AMT Base = max(0, AMTI - AMT Exemption)
TMT = 26% on first $244,500 of AMT Base + 28% above

AMT Owed = max(0, TMT - Regular Tax)

The two critical OBBBA changes: (1) the exemption phase-out rate doubled from 25% to 50%, so exemptions are eliminated faster, and (2) phase-out thresholds dropped from $626K/$1.25M to $500K/$1M. AMT tax rates remain 26%/28%. Together, these changes pull far more taxpayers into AMT territory.

Example

Sarah — Software Engineer, San Jose, CA

Sarah earns $280K filing Single, pays $22,000 in California state income tax + $8,000 property tax ($30K SALT), and exercised ISOs with a $60,000 spread from her startup equity. No other AMT preferences.

AMT Check

Gross income$280,000

Standard deduction-$16,100

Regular taxable income$263,900

Regular federal tax (32% marginal)$55,216

SALT add-back (capped at $40,400)+$30,000

ISO exercise spread+$60,000

AMTI$353,900

AMT exemption (full, below $500K)$90,100

AMT base$263,800

TMT (26% on $244,500 + 28% on $19,300)$68,974

AMT owed (TMT - regular tax)$10,526

Impact: Sarah owes $10,526 in AMT on top of her regular tax, primarily driven by the SALT add-back and ISO exercise spread. Strategy: use the ISO Exercise tab to find the maximum shares she can exercise without triggering AMT, then spread exercises across multiple years.

FAQ

What changed with AMT under OBBBA for 2026? ▼

OBBBA made two key AMT changes effective 2026: (1) the exemption phase-out rate doubled from 25% to 50%, meaning exemptions are eliminated twice as fast, and (2) phase-out thresholds were lowered from $626K/$1.25M to $500K/$1M (single/MFJ). AMT tax rates remain 26% (up to $244,500) and 28% (above). These changes mean more taxpayers will owe AMT because their exemptions phase out sooner and at lower income levels.

What are the 2026 AMT exemption amounts? ▼

Under OBBBA §55(d), the 2026 AMT exemptions are: Single $90,100, Married Filing Jointly $140,200, Married Filing Separately $70,100, Head of Household $90,100. The exemption phases out at 50 cents per dollar of AMTI above $500,000 (single) or $1,000,000 (MFJ). The exemption is fully eliminated at $680,200 (single) or $1,280,400 (MFJ).

How do ISO exercises trigger AMT? ▼

When you exercise Incentive Stock Options (ISOs), the "bargain element" — the spread between fair market value and your strike price — is not taxed for regular income tax. However, under IRC §56(b)(3), this spread IS an AMT preference item added to your AMTI. Each dollar of ISO spread that pushes you into AMT costs 26-28 cents in AMT tax. Under OBBBA's faster exemption phase-out, AMT triggers at lower income levels, making ISO exercise planning even more important.

How does SALT affect AMT? ▼

State and local tax (SALT) deductions are completely disallowed under AMT. When you itemize and deduct SALT for regular tax purposes, that entire deduction gets added back to calculate AMTI. Under OBBBA, the SALT cap is $40,400 (with a 30% phase-down above $505K MAGI). If you live in a high-tax state like California, New York, or New Jersey, the SALT add-back is a major AMT trigger — especially now that OBBBA's faster phase-out means exemptions are eliminated sooner.

What is the AMT credit and can I recover AMT paid? ▼

When you pay AMT due to "timing" items like ISO exercises, you generate an AMT credit (Form 8801). In future years, if your regular tax exceeds your tentative minimum tax, you can use this credit to reduce your tax bill. The formula: AMT credit usable = min(prior AMT paid, regular tax minus TMT). The credit carries forward indefinitely. To maximize recovery, avoid triggering new AMT preferences in subsequent years so your TMT stays below regular tax.

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