Alternative minimum tax 2024-2025: What it is and who has to pay
The alternative minimum tax, or AMT, runs parallel to our regular tax system. It’s essentially a second method for calculating a taxpayer’s bill. It applies to people whose income exceeds certain levels and is intended to close the loopholes that allow them to reduce or eliminate their tax payments. It’s adjusted each year for inflation.
How the AMT works
The AMT has its own set of tax rates (26 percent and 28 percent) and requires a separate calculation from regular federal income tax. Basically, it’s the difference between your regular tax bill, based on ordinary income tax rates, and your AMT bill, determined by completing IRS Form 6251. When there’s a difference, you may have to pay the AMT amount in addition to your regular tax.
The AMT increases the amount of income that is taxed for high earners. It adds items that are not taxed under the standard tax rates and rejects or reduces some common tax breaks used by taxpayers to lower their tax bills.
AMT exemption amounts for 2024
To fall into the AMT for 2024, you must have earned more than the minimum level in the chart below. (Earning more than these levels doesn’t automatically subject you to the AMT.)
| Filing status | 2024 AMT exemption |
|---|---|
| Single or head of household | $85,700 |
| Married, filing separately | $66,650 |
| Married, filing jointly | $133,300 |
AMT exemption amounts for 2025
To fall into the AMT for 2025, you must have earned more than the minimum level in the chart below. (Earning more than these levels doesn’t automatically subject you to the AMT.)
| Filing status | 2025 AMT exemption |
|---|---|
| Single or head of household | $88,100 |
| Married, filing separately | $68,500 |
| Married, filing jointly | $137,000 |
Who has to pay the AMT?
Anyone who exceeds the income levels in the above charts may be subject to the AMT. However, reaching those levels does not automatically trigger the AMT. You can complete IRS Form 6251 by hand, use a tax software program or hire a professional tax preparer to determine if you owe the AMT and, if so, calculate the amount you owe.
The IRS has set income levels to determine which rate you’re charged for your AMT. If your income is less than the stated level in the charts below, you’re taxed at 26 percent. If your income is over the stated level, you’re taxed at a rate of 28 percent.
| Filing status | 2024 AMT tax rate income level |
|---|---|
| Single or head of household | $232,600 |
| Married, filing separately | $116,300 |
| Married, filing jointly | $232,600 |
| Filing status | 2025 AMT tax rate income level |
|---|---|
| Single or head of household | $239,100 |
| Married, filing separately | $119,550 |
| Married, filing jointly | $239,100 |
This means that, for example, for a single person who earned more than $85,700 in 2024, but less than $232,600, the AMT rate is 26 percent. If that person earned more than $232,600, the AMT tax rate goes up to 28 percent.
The AMT exemption — the amount of income taxpayers can exempt before triggering AMT — eventually phases out at 25 cents per dollar earned once income has reached the thresholds in the charts below.
| Filing status | 2024 AMT phaseout threshold |
|---|---|
| Single or head of household | $609,350 |
| Married, filing separately | $609,350 |
| Married, filing jointly | $1,218,700 |
| Filing status | 2025 AMT phaseout threshold |
|---|---|
| Single or head of household | $626,350 |
| Married, filing separately | $626,350 |
| Married, filing jointly | $1,252,700 |
How the AMT can impact your eligibility for tax breaks
With the AMT, many of the items you might deduct for your standard taxes no longer apply. Under the AMT:
- You don’t receive the standard deduction.
- You cannot deduct state and local taxes, nor real estate property taxes.
Additional items that are treated differently under the AMT are:
- Incentive stock options.
- Excess intangible drilling costs.
- Tax-exempt interest from certain private activity bonds.
- Depletion and accelerated depreciation on certain leased personal or real property.
Determining your AMT liability can be complicated. A tax software program or a tax professional may be the best way to determine what you owe.
