AMT Risk Calculator

Description

The AMT Risk Calculator helps taxpayers assess their potential exposure to the Alternative Minimum Tax (AMT), a parallel tax system designed to ensure that high-income individuals who benefit from certain tax preferences pay at least a minimum level of federal income tax. While the Tax Cuts and Jobs Act of 2017 significantly reduced the number of taxpayers subject to AMT by increasing exemption amounts and phase-out thresholds, the AMT remains a real concern for certain taxpayer profiles — particularly those with large state and local tax deductions (SALT), significant incentive stock option (ISO) exercises, substantial long-term capital gains, tax-exempt interest from private activity bonds, or large miscellaneous deductions. This calculator estimates your AMT liability by computing your Alternative Minimum Taxable Income (AMTI), which starts with regular taxable income and adds back common AMT preference items and adjustments. The most significant AMT adjustments include the disallowance of the SALT deduction (which is already capped at $10,000 for regular tax purposes but fully disallowed for AMT), the addition of ISO bargain element spread (the difference between the exercise price and fair market value when you exercise incentive stock options), the inclusion of private activity bond interest, and various timing differences in depreciation calculations. After computing AMTI, the calculator applies the AMT exemption (which phases out at higher income levels) and the AMT tax rates (26% on the first $220,700 of AMT income above the exemption, 28% on the excess) to determine tentative minimum tax. AMT is owed only if the tentative minimum tax exceeds your regular tax liability. For cross-border taxpayers, the calculator addresses how the Foreign Tax Credit interacts with AMT and whether foreign taxes can offset AMT liability.

Input Fields

Formula Explanation

Alternative Minimum Taxable Income (AMTI) = Regular Taxable Income + SALT Deduction add-back + ISO Bargain Element + Private Activity Bond Interest + Other AMT adjustments. AMT Exemption is subtracted (phased out at higher incomes). Tentative Minimum Tax = 26% of AMTI above exemption up to approx $220,700 + 28% of excess. AMT owed = max(0, Tentative Minimum Tax - Regular Tax). AMT Credit may be generated from timing differences (like ISOs) for use in future years.

Example Calculation

Frequently Asked Questions