The alternative minimum tax (AMT) is a parallel tax system that recalculates taxable income by adding back certain deductions, exemptions, and tax preferences items that are allowed under the regular tax system. It applies in addition to the regular federal income tax for certain individuals, estates, and trusts.
The AMT is designed to ensure that higher-income taxpayers pay at least a minimum amount of tax despite receiving favorable treatment under the regular tax rules. It applies only when a taxpayer’s income exceeds specified exemption amounts, which are adjusted annually for inflation. For the 2024 tax year (filed in 2025), the AMT exemption was $133,300 for married couples filing jointly, $85,700 for single filers and heads of household, and $66,650 for married individuals filing separately.
[Last reviewed in August of 2025 by the Wex Definitions Team]