The 2026 AMT exemption, and why more filers will actually owe it
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The 2026 AMT exemption went up, which sounds like good news — but a new law cut the income level where it starts disappearing and doubled the rate it disappears at.
The 2026 AMT exemption is $90,100 for a single filer and $140,200 for a married couple filing jointly, both up from 2025. That increase sounds like straightforward good news, but it is only half the story: a provision of the One Big Beautiful Bill Act cut the income level where the exemption starts disappearing and doubled the speed at which it disappears once income crosses that line. The net effect pulls more high earners back into a tax the exemption is supposed to shield most people from entirely.
The 2026 exemption amounts themselves
| Filing status | 2025 exemption | 2026 exemption | 2026 phase-out starts at |
|---|---|---|---|
| Single / head of household | $88,100 | $90,100 | $500,000 |
| Married filing jointly | $137,000 | $140,200 | $1,000,000 |
These figures come from the IRS's 2026 inflation adjustment announcement, which explicitly incorporates the AMT changes made by the One Big Beautiful Bill Act (OBBBA) rather than applying the ordinary inflation formula alone. The exemption amounts themselves rose the way they normally do each year; what changed underneath them is new.
How the phase-out actually works
The AMT exemption is not a flat amount available to everyone below the threshold and unavailable above it — it shrinks gradually. For every dollar of alternative minimum taxable income (AMTI) above the threshold, the exemption is reduced by 50 cents in 2026, up from 25 cents in 2025 and every year since the 2018 tax law took effect. That means a single filer's exemption is completely gone once AMTI reaches $680,200 — $500,000 plus $180,200 needed to erase the $90,100 exemption at 50 cents on the dollar. For a married couple filing jointly, the exemption disappears entirely at $1,280,400 of AMTI, using the same arithmetic against the $140,200 exemption.
The 26% and 28% AMT rates
Once the exemption has been subtracted from AMTI, the remaining amount is taxed under just two AMT rates — no seven-bracket structure like the regular income tax:
| AMT rate | Applies to (after exemption) |
|---|---|
| 26% | first $244,500 of the AMT base |
| 28% | everything above $244,500 of the AMT base |
That $244,500 breakpoint is up from $239,100 in 2025 — the ordinary annual inflation adjustment, unaffected by the phase-out changes discussed above. It applies to every filing status except married filing separately, where the breakpoint is half the figure, $122,250, since two separate returns are each working toward the same combined ceiling a joint return would use.
Why OBBBA pulls more people back into AMT territory
From 2018 through 2025, the tax law generally known as the Tax Cuts and Jobs Act pushed AMT phase-out thresholds much higher than they had been before — $626,350 for a single filer and $1,252,700 for a married couple by 2025 — which kept most upper-middle-income filers clear of the tax entirely, since regular deductions were also capped in ways that reduced the gap AMT exists to close. OBBBA made the higher, post-2018 exemption amounts permanent, but reset the phase-out thresholds back down toward roughly where they sat before 2018, and doubled the rate the exemption disappears at on top of that. A taxpayer with AMTI comfortably between $500,000 and roughly $1,300,000 — a band that includes plenty of dual-income professional households, not just the ultra-wealthy — is now considerably more likely to see AMT owed than the identical income would have produced under 2025 rules.
What actually triggers an AMT bill
AMT runs a second, parallel calculation of taxable income that disallows or adds back certain items the regular income tax allows, then compares the result against the regular tax bill. The most common trigger for salaried employees is exercising incentive stock options: the spread between the strike price and fair market value at exercise counts as income for AMT purposes even though it is not taxed under the regular rules until the shares are eventually sold. State and local tax deductions are added back in full under AMT regardless of what a filer deducted on the regular return, and certain other itemized deductions and private activity bond interest are treated the same way. None of these AMT-specific add-backs changed for 2026 — what changed is only the exemption amount, the phase-out threshold, and the phase-out rate discussed above, which together determine how much of that add-back income actually turns into a bill.
What the calculation looks like for a single filer
Take a single filer with $650,000 of alternative minimum taxable income in 2026 — common triggers include exercising incentive stock options or claiming a large amount of certain itemized deductions that AMT does not allow:
| Step | Calculation | Amount |
|---|---|---|
| Alternative minimum taxable income (AMTI) | $650,000 | |
| Income above the $500,000 phase-out threshold | $650,000 − $500,000 | $150,000 |
| Exemption reduction | 50% × $150,000 | $75,000 |
| Remaining exemption | $90,100 − $75,000 | $15,100 |
| AMT base | $650,000 − $15,100 | $634,900 |
| 26% on the first $244,500 | $63,570 | |
| 28% on the remaining $390,400 | $109,312 | |
| Tentative minimum tax | $172,882 |
This $172,882 figure is only the AMT-side calculation, not automatically an additional bill — AMT is owed only to the extent this tentative minimum tax exceeds what the same filer already owes under the regular income tax rules, using the income tax calculator to work out that regular-tax figure separately for comparison. If the regular tax bill is higher, no AMT is due at all; if the tentative minimum tax is higher, the difference between the two is the AMT owed on top of the regular tax.
Who should actually check this
- Anyone exercising incentive stock options in 2026, since the untaxed spread at exercise is one of the most common AMT triggers and is easy to overlook until a tax bill arrives.
- Anyone with AMTI comfortably above $500,000 single or $1,000,000 joint, since that is exactly the band OBBBA newly exposed compared with 2025 rules.
- Most filers with AMTI well below these thresholds are unaffected regardless of how many itemized deductions they claim, since the phase-out has not even started for them.
Sources
- IRS: 2026 tax inflation adjustments, including amendments from the One, Big, Beautiful Bill
- Tax Foundation: 2026 Tax Brackets and Federal Income Tax Rates
This is general information, not tax advice. Whether AMT applies to you depends on your complete tax return, not the exemption and phase-out figures alone. For a decision about your own AMT exposure, speak to a tax professional before year-end, particularly if you plan to exercise stock options.