AMT Rates:
26%, on Alternative Minimum Taxable Income (AMTI) up to
2022 - $206,100 ($103,050 for married filing separately)
2021 - $199,900 ($99,950 for married filing separately)
2020 - $197,900 ($98,950 for married filing separately)
28% on AMTI over the above amounts.
The AMT Exemption
Because the alternative minimum tax (AMT) was never intended to apply to
lower and middle income taxpayers who have small amounts of AMT adjustment or preference items, an exemption is provided to taxpayers to prevent this from occurring.
The AMT exemption is an amount that a taxpayer is allowed to deduct from
alternative minimum taxable income before calculating the taxpayer’s AMT
liability. The exemption amount for a particular taxpayer depends on the taxpayer’s filing status. To prevent upper-income taxpayers from benefiting from the AMT exemption, the exemption phases out after a taxpayer’s AMTI reaches a certain level, also based on the taxpayer’s filing status.
AMT Exemption Amounts - 2022
For 2020, the AMT exemption amounts for taxpayers not subject to the
exemption phase-out are:
A child subject to the kiddie tax rules for regular tax purposes determines his or her AMT exemption under special rules in Code Sec. 59(j)(1). The AMT exemption for a child subject to the kiddie tax is the lesser of the AMT
exemption for a single taxpayer or the total of the child's earned income plus $5,000, indexed for inflation. For 2022, the amount indexed for inflation is $8,200.
Exemption Phase-Out and Phase-Out Thresholds - 2022
The AMT exemption amount is reduced one dollar for every four dollars of AMTI above the threshold amount for the taxpayer’s filing status.
Exemption phase-out thresholds: The phase-out thresholds are:
EXAMPLE: Tim and Heather, a couple filing jointly, have AMTI of $1,094,200 in 2022. Their AMT exemption is $114,500, which is the full exemption amount of $114,600 less $3,600 [.25 x ($1,094,200 - $1,079,800)].
AMTI level exemption is completely phased out: Because the AMT exemption phase-out is controlled by the amount of the exemption for a filing status and the amount that AMTI exceeds the phase-out threshold for that filing status, there is a common AMTI level where the exemption for each filing status phases out completely for all taxpayers filing under that status. The exemption phases out completely at the following levels of AMTI in 2022:
Practical Effect of the Exemption Phase-out
Although taxpayers with AMTI above the phase-out threshold still calculate
their AMT liability using the same rate as taxpayers that are not subject to
exemption phase-out, the loss of the exemption raises the taxpayer’s effective AMT tax rate. This occurs because for each $1 of income in the phase-out range, the amount of AMTI actually subject to tax increases by $1.25. This results in an effective AMT rate of 35% (instead of 28%) for AMTI in the phase-out range.
Need more help with the AMT Exemption rules?
Submit a question to the AMT Advisor.
