8578 / What is the alternative minimum tax (AMT) exemption? Is there a phase out of the AMT exemption?
Editor’s Note: The 2017 tax reform legislation temporarily increased the AMT exemption amount for tax years beginning after December 31, 2017 and before December 31, 2025. For 2025, the amount increased to $137,000 for married taxpayers filing joint returns (half this amount for separate returns, $68,500) and $88,100 for all other taxpayers. For 2024, the amount was $133,300 for married taxpayers filing joint returns (half this amount for separate returns, $66,650) and $85,700 for all other taxpayers.1 The 2025 OBBB made the increase permanent.
The purpose of the AMT exemption is to prevent its imposition on lower income taxpayers. However, the AMT exemption does phase out when AMTI reaches certain threshold levels.2
The phase out is a reduction of the exemption by 50 percent of each dollar over the applicable threshold (25 percent for tax years beginning before 2026).Under the 2025 OBBB, beginning in 2026, the threshold amounts revert back to their 2018 levels of $1 million for joint returns and $500,000 for all other returns.
The following chart sets forth the applicable 2025 AMTI thresholds as well as the total phase out amount.
| Filing Status | AMTI Exemption Phase Out Threshold Amount |
| Married filing jointly | $1,252,700 |
| All other taxpayers (other than trusts and estates) | $626,350 |
| Trusts and Estates | $102,450 |
Example: In 2025, Asher and Ashley, a married couple, have AMTI of $1,300,000. Their AMT exemption without considering the phase out is $137,000. However, the couple’s AMTI is $1,300,000 and the AMTI exemption phase out threshold amount is $1,252,700. As a result, their AMT exceeds the threshold amount by $47,300. Applying the phase out, the couple’s 2025 exemption amount is reduced from $137,000 to $11,825 (25% * $47,300).
1. IRC § 55(d)(4); Rev. Proc. 2023-34, Rev. Proc. 2024-40.
2. IRC § 55(d)(3).