irs.gov

The tax law provides certain benefits to reduce a taxpayer's regular tax amount, while the alternative minimum tax (AMT) sets a limit on these benefits for high-income taxpayers to ensure they pay a minimum tax. The AMT is the excess of the tentative minimum tax over the regular tax and is owed only if the former exceeds the latter. To calculate the tentative minimum tax, taxable income is adjusted, AMT exemption amount is subtracted, the result is multiplied by AMT tax rates, and the AMT foreign tax credit is subtracted. AMT exemption amounts and tax rates are set by law. Taxpayers can apply special capital gain rates if they are lower than AMT rates and some tax credits that reduce regular tax do not reduce AMT liability.