Don't Let the AMT Catch You Off Guard

Are you subject to the alternative minimum tax (AMT)? In general, this tax applies if your “tentative minimum tax” exceeds your regular income tax liability. Significant long-term capital gains and dividend income or recently exercised incentive stock options can trigger the AMT. Although the 2025 tax legislation, commonly known as the One Big Beautiful Bill Act, makes higher AMT exemptions permanent, it phases them out twice as fast beginning in 2026.

Also, the legislation quadrupled the limit for the state and local tax deduction, which isn’t deductible for AMT purposes. So that item may become an AMT Achilles’ heel for more taxpayers. If you’re concerned about the AMT, contact the office. Good planning may help you avoid it.