What Is the Alternative Minimum Tax (AMT)?
The alternative minimum tax (AMT) is a separate US federal income tax calculation designed to ensure that taxpayers with certain high deductions or tax preferences pay at least a minimum amount of tax. Taxpayers compute tax under both the regular system and the AMT and pay the higher amount.
How It Works
AMT adds back certain deductions and preferences, subtracts an exemption amount that phases out at higher incomes, and applies AMT rates.
Who Is Affected
Since exemption amounts rose, relatively few taxpayers owe AMT; it is more common with items such as exercised incentive stock options.
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
- Cost Basis
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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.