One outcome of the One Big Beautiful Bill Act (OBBBA) is that more high-income taxpayers will most likely be subject to the alternative minimum tax (AMT) starting in 2026. New Era for the AMT The AMT Tales The AMT is a parallel tax system that eliminates many of the deductions and credits often used by taxpayers to reduce their tax bills under the normal rules. Consequently, more income may be taxable under the AMT. When the original law was passed in 1969, Congress wanted to ensure that taxpayers with high incomes pay at least a minimum amount of taxes. Under the One Big Beautiful Bill Act (OBBBA), although AMT exemption levels are now indexed for inflation, the tax’s reach expanded in 2026. This is because the OBBBA lowers the income thresholds in which the exemption disappears and doubles the speed of that phaseout, meaning more high-income households will most likely be affected. Two Ways to a Tax Bill The American Taxpayer Relief Act of 2012 permanently indexed the AMT exemption levels annually for inflation, but didn’t change the income threshold at which exemptions begin to phase out, which resulted in more people subject to the tax. The Tax Cuts and Jobs Act significantly increased the AMT exemption amounts and the income phaseout threshold for tax years 2018 through 2025. Under OBBBA, beginning in 2026, the AMT exemption amounts were permanently set at higher levels ($90,100 for single filers and $140,200 for married couples filing jointly), but the income phaseout thresholds were significantly lowered to $500,000 for single filers and $1,000,000 for married couples. Taxpayers with incomes above the AMT exemption amounts must calculate their taxes under both sets of rules and pay the higher of the two. For 2026, the OBBBAmaintains the two-tier structure where taxpayers pay a tax rate of 26% on Alternative MinimumTaxable Income (AMTI) up to $244,400 (for single filers and married couples filing jointly). The tax rate increases to 28% on AMTI above this amount.
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