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AMT Calculator

Created by Wei Bin Loo and Tibor Pál, PhD candidate
Reviewed by Tibor Pál, PhD candidate and Steven Wooding
Based on research by
Internal Revenue Service Instructions for Form 6251;; 2022
Last updated: Jan 18, 2024


With this AMT calculator, we aim to help you calculate the minimum tax you owe to the government. To understand more on this topic, check out our salary calculator.

We have written this article to help you understand what alternative minimum tax is and how AMT is calculated. We will also demonstrate an alternative minimum tax calculation example to help you understand the process.

What is alternative minimum tax?

The alternative minimum tax is the minimum amount of tax a person owes to the government. It takes into account the exemption amount, which is the part of your salary that is not subjected to taxation, and tax credits, which is the money returned by the government to the taxpayers.

Now, let's look at how we can calculate the AMT tax.

How to calculate alternative minimum tax? How is AMT calculated?

To understand the concept of alternative minimum tax, let's take Mirabelle as an alternative minimum tax calculation example:

  • Year of income: 2023
  • Total income: $120,000
  • Non-deductible taxes: $20,000
  • Filing status: Single
  • Tax credits: $1,000
  1. Calculate the AMT income.

    The first step is to calculate your AMT income. The AMT income uses this formula:

    AMT income = total income + tax non-deductible part of your deductions.

    Hence, Mirabelle's AMT income is $120,000 + $20,000 = $140,000.

    You can also check out our annual income calculator to understand more about this topic.

  2. Calculate the taxable income.

    To calculate the taxable income, you must first consider your filing status. The filing status determines your AMT exemption amount as follows:

Filing Status

2022

2023

Single

75,900

81,300

Married Filing Jointly

118,100

126,500

Married Filing Separately

59,050

63,400

In addition, you should take into consideration the below phase-out thresholds. If your income exceeds this limit, your AMT exemption begins to phase out at 25 cents for every dollar over the threshold.

Filing Status

2022

2023

Single

539,900

578,150

Married Filing Jointly

1,079,800

1,156,300

Married Filing Separately

539,900

578,150

Now, you can calculate the taxable income using this formula:

taxable income = AMT income - AMT exemption amount

Hence, Mirabelle's taxable income is $140,000 - $81,300 = $58,700.

  1. Determine the tax credits.

    Then, we need to determine the tax credits you are entitled to receive. The tax credits are the amount of money that the government returns to the taxpayers under some special circumstances. For example, to help families with children, the U.S. government impose the Child Tax Credits to relieve the burden of families with kids.

    In the example, Mirabelle is entitled to tax credits of $1,000.

  2. Calculate the alternative minimum tax.

    The last step is to calculate the alternative minimum tax considering the applicable AMT tax rates summarized in the below table.

Applicable tax rates for 2022:

Filing status

Tax rate 26% below threshold

Tax Rate of 28% above threshold

Other than married filing separately

Up to $206,100

Any excess above 206,100

Married Filing Separately

Up to $103,050

Any excess above $103,050

Applicable tax rates for 2023:

Filing status

Tax rate 26% below threshold

Tax Rate of 28% above threshold

Other than married filing separately

Up to $220,700

Any excess above 220,700

Married Filing Separately

Up to $110,350

Any excess above $110,350

You can achieve this by applying the alternative minimum tax equation:

alternative minimum tax = (AMTI below threshold × 26% + any excess above threshold × 28%) - tax credits

Thus, in this example, Mirabelle's alternative minimum tax is $58,700 × 26% - $1,000 = $14,262.

  1. Compare the alternative minimum tax with your regular income tax, which you may estimate by our tax bracket calculator: you must pay the higher tax amount.

What are the applications of AMT?

Now, let's talk about some of AMT's applications.

If the taxpayer's AMT liability exceeds their regular tax liability, they must pay the higher amount. However, if their regular tax liability is greater than their AMT liability, they will not owe any additional tax under the AMT system.

It's worth noting that deductions for state and local taxes are generally not allowed under the AMT. This is a significant change from the regular tax rules, where taxpayers are typically allowed to deduct these taxes from their taxable income. Additionally, certain deductions for medical expenses and miscellaneous itemized deductions are also limited under the AMT system.

While there is no guaranteed way to avoid paying the AMT, there are some steps that may reduce your likelihood of being subject to the tax. For example, reducing certain deductions or deferring certain types of income may help to lower your AMT liability. Additionally, consulting with a tax professional can help you navigate the complex rules surrounding the AMT and develop a strategy for minimizing your tax liability.

FAQ

What is the alternative minimum tax if my taxable income is $100,000?

The alternative minimum tax will be $15,000. This is based on the assumption of a tax rate of 15% and no tax credits.

How do I calculate my alternative minimum tax?

You can calculate the AMT tax in four steps:

  1. Calculate the AMT income.

  2. Determine the taxable income based on your filing status.

  3. Determine the appropriate tax rate.

  4. Apply the alternative minimum tax formula:

    taxable income × tax rate - tax credits

What is taxable income?

Taxable income is the amount of your income that is subjected to the tax imposed by the government. The part of your salary that is not subjected to tax is called the exemption amount.

How does the AMT affect my tax liability?

If your AMT liability exceeds your regular tax liability, you will owe the higher amount. However, if your regular tax liability is greater than your AMT liability, you will not owe any additional tax under the AMT system.

Disclaimer

You should consider the AMT Calculator as a model for approximation. All payment figures are estimates based on the data you provided in the specifications that are, despite our best effort, not exhaustive.

For this reason, we created the calculator for instructional purposes only. Still, if you experience a relevant drawback or encounter an inaccuracy, we are always pleased to receive useful feedback and advice.

Wei Bin Loo and Tibor Pál, PhD candidate
Alternative minimum tax income
Year
2022
Adjusted Gross Income (AGI)
$
Non-deductible taxes
$
AMTI
$
Taxable income
Filing status
Single
Taxable income
$
Tax credits
$
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