What is the AMT exemption phase-out?
The AMT exemption phase-out is a mechanism in the Alternative Minimum Tax system that gradually reduces the exemption amount as a taxpayer's Alternative Minimum Taxable income increases above specific threshold levels. Under the One Big Beautiful Bill Act, the phase-out rate increased to 50% starting in 2026, meaning the exemption reduces by $1 for every $2 of income above the threshold. For 2026, married couples filing jointly experience a phase-out starting at approximately $1,218,700 of AMTI, while single filers face a phase-out beginning at roughly $609,350. The exemption completely disappears once AMTI reaches about $1,485,300 for married couples and $785,900 for single filers. Understanding the phase-out structure helps high-income taxpayers develop strategies to preserve exemption benefits through income timing and coordination with deductions like Traditional 401k contributions that reduce Alternative Minimum Taxable income.
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