irs.gov

The tax law provides certain benefits that can reduce a taxpayer's regular tax amount, but the alternative minimum tax (AMT) imposes a limit on these benefits for high-income earners to ensure they pay a minimum tax. The AMT is the excess of the tentative minimum tax over the regular tax, and it is owed only when the tentative minimum tax exceeds the regular tax. The tentative minimum tax is calculated separately by adjusting taxable income, subtracting the AMT exemption amount, applying AMT tax rates, and deducting the AMT foreign tax credit. The AMT exemption amounts and tax rates are set by law, and taxpayers may use special capital gain rates for regular tax if they are lower than the AMT rates. Some tax credits that reduce regular tax do not apply to reducing AMT tax liability.