Form 6251 2026 draft: AMT exemption now phases out at $500,000

The short answer. The IRS posted its draft Form 6251 for tax year 2026 on May 26, 2026, and it is the first version of the alternative minimum tax form built on Public Law 119-21. The exemption rises with inflation to $90,100 for single filers and $140,200 for joint returns, and the 26 percent rate now covers the first $244,500 of income above it. The real change is the phase-out. The exemption now starts to shrink at $500,000 of alternative minimum taxable income ($1,000,000 for joint returns), down from $626,350 and $1,252,700 in 2025, and it shrinks by 50 cents per dollar instead of 25. Between $500,000 and $680,200 a single filer’s next dollar of AMT income costs 42 cents. Most people who exercise stock options will not notice any of this; the ones who do are the ones with a very large exercise. Every 2026 AMT figure on this page comes from the draft form, the draft instructions and the statute as amended. The draft 2026 instructions are now posted (their footer is dated Nov 6, 2026), and they contradict themselves on where the phase-out starts; the section at the end of this page explains which reading is right.

The regular-tax side of the same year, including where these thresholds fit among the 2026 brackets, is in the 2027 tax brackets projection, which carries the confirmed 2026 tables. For equity compensation that does not trigger the AMT, see how RSUs are taxed at vesting.

What the AMT is, in one paragraph

The alternative minimum tax is a second, flatter calculation of your income tax that runs alongside the regular one. It starts from your regular taxable income, adds back items the AMT does not allow (the standard deduction, state and local taxes if you itemize, the bargain element of incentive stock options, private-activity bond interest and a list of other preferences on lines 2a to 3), subtracts a large exemption, and taxes the rest at 26 or 28 percent. If that “tentative minimum tax” is higher than your regular tax, you pay the difference as AMT on Schedule 2, line 2. Since 2018 the exemption has been large enough that few wage earners pay it; the 2026 change narrows that cushion only for high incomes.

The two forms side by side

Line	2025 form	2026 draft	What it means
1a	Form 1040 line 14 minus Schedule 1-A line 37	Form 1040 line 14 minus Schedule 1-A line 43	Same rule, new line number: the senior deduction is added back
4 (note)	Married filing separately over $900,350: see instructions	Over $640,200: see instructions	The point where the separate filer’s exemption is gone; above it, add 50% of the excess to line 4 (maximum $70,100, reached at $780,400), against 25% of the excess over $900,350 (maximum $68,500, reached at $1,174,350) in 2025
5, single / HoH	$88,100, phase-out from $626,350	$90,100, phase-out from $500,000	Exemption up $2,000; phase-out starts $126,350 lower
5, joint	$137,000, phase-out from $1,252,700	$140,200, phase-out from $1,000,000	Exemption up $3,200; phase-out starts $252,700 lower
5, separate	$68,500, phase-out from $626,350	$70,100, phase-out from $500,000	Half of the joint figures
7, 18, 39	26% on the first $239,100, then 28% minus $4,782	26% on the first $244,500, then 28% minus $4,890	Inflation adjustment only ($122,250 and $2,445 separate)
7	Capital gain distributions “on Form 1040 line 7"	"on Form 1040 line 7a”	Wording fix: the 2025 Form 1040 already numbers that line 7a
Part III	0% capital gains ceiling $48,350 / $96,700 / $64,750	$49,450 / $98,900 / $66,200	Single / joint / head of household
Part III	15% ceiling $533,400 / $600,050 / $566,700 / $300,000	$545,500 / $613,700 / $579,600 / $306,850	Single / joint / HoH / separate

Everything else on the form, from the twenty adjustment lines 2a through 2t to the foreign tax credit on line 8 and the comparison with regular tax on line 10, is word for word the same as 2025.

Where the new phase-out comes from

The exemption and its phase-out live in 26 U.S.C. 55(d). The 2017 tax law had raised both temporarily, through 2025. Section 70107 of Public Law 119-21 made the higher exemption permanent but rewrote the phase-out in subsection (d)(4): the threshold becomes “$1,000,000” for joint returns and “50 percent of the dollar amount applicable” for everyone else, and the phase-out rate becomes “50 percent” instead of “25 percent.” The amendment applies to “taxable years beginning after December 31, 2025.”

The inflation clause is the part most summaries get wrong. Under the amended (d)(4)(B), the $1,000,000 figure is indexed only for taxable years beginning in a calendar year after 2026, with calendar year 2025 as the base year. So the $500,000 and $1,000,000 on the 2026 draft are round numbers because 2026 is the one year they are not adjusted. 2027 is the first year they move.

With a threshold and a rate, the rest follows. The exemption is gone once the excess over the threshold, times 50 percent, equals the exemption: $500,000 plus 2 × $90,100 gives $680,200 for a single filer, $1,000,000 plus 2 × $140,200 gives $1,280,400 for a joint return, and $500,000 plus 2 × $70,100 gives the $640,200 that the draft prints next to line 4 for separate filers. Under the 2025 rules the same arithmetic, with a factor of 4 instead of 2, gave $978,750, $1,800,700 and $900,350. The last figure is exactly the one on the 2025 form. Above that point the separate filer must add an extra amount to line 4. Under 26 U.S.C. 55(d)(2) it is a share of the excess over the point where the exemption reaches zero, capped at the exemption amount itself, so the separate filer ends up losing the equivalent of the full $140,200 joint exemption over the same $280,400 range a joint return uses. The 2026 draft instructions set it at 50 percent of the excess of line 4 over $640,200, capped at $70,100, a cap reached when line 4 is $780,400. The 2025 instructions used 25 percent of the excess over $900,350, capped at $68,500, reached at $1,174,350.

Filing status	2025: exemption fully gone at	2026: exemption fully gone at
Single or head of household	$978,750	$680,200
Married filing jointly	$1,800,700	$1,280,400
Married filing separately	$900,350	$640,200

The 42 percent zone

A phase-out works like an extra tax rate. Inside the range, one more dollar of AMT income does two things: it is taxed at 28 percent, and it removes 50 cents of exemption, which then becomes taxable at 28 percent as well. The dollar costs 28 + 14 = 42 cents. Under the 2025 rules it removed 25 cents of exemption and cost 28 + 7 = 35 cents. Above the top of the range there is no exemption left to lose, and the marginal rate drops back to 28 percent.

So the 2026 range is narrower and steeper. For a single filer it runs $180,200 wide at 42 percent, where the 2025 range ran $352,400 wide at 35 percent. For income well past the range the two sets of rules converge, because both end with no exemption at all.

A worked example: incentive stock options

Incentive stock options are the most common way an employee with a salary lands in the AMT. Exercising and holding the shares creates no regular income, but the spread between the market price and the strike price goes on line 2i of Form 6251 as an adjustment. Take a single filer with $250,000 of W-2 wages, no other income and the standard deduction, and vary the spread. The regular tax uses the 2026 brackets and the $16,100 standard deduction (2025 column: the 2025 brackets from Revenue Procedure 2024-40 and the $15,750 standard deduction). Neither year has capital gains, so line 7 uses the 26/28 percent rule.

Here is the 2026 return with a $300,000 spread, line by line:

• Taxable income (Form 1040 line 15): $250,000 − $16,100 = $233,900. Regular tax: $51,304.
• Line 1b: $233,900 (no Schedule 1-A deduction to add back).
• Line 2a: the standard deduction, $16,100, goes back in.
• Line 2i: the ISO spread, $300,000.
• Line 4, alternative minimum taxable income: $233,900 + $16,100 + $300,000 = $550,000.
• Line 5, exemption: $550,000 is $50,000 over $500,000, so the exemption shrinks by half of that. $90,100 − $25,000 = $65,100.
• Line 6: $550,000 − $65,100 = $484,900.
• Line 7: above $244,500, so $484,900 × 28% − $4,890 = $130,882.
• Line 11, AMT: $130,882 − $51,304 = $79,578.

Under the 2025 rules the same $550,000 sits below the $626,350 threshold, so the full $88,100 exemption survives, line 6 is $461,900, the tentative minimum tax is $124,550 and the AMT is $72,527. The 2026 law costs this filer $7,051 more.

ISO spread	AMT income	2025 rules: AMT	2026 draft: AMT	Difference
$100,000	$350,000	$16,527	$16,578	+$51
$200,000	$450,000	$44,527	$44,578	+$51
$300,000	$550,000	$72,527	$79,578	+$7,051
$350,000	$600,000	$86,527	$100,578	+$14,051
$400,000	$650,000	$102,183	$121,578	+$19,395

Two things stand out. First, below $500,000 of AMT income the two years are practically identical; the $51 is only the net of inflation adjustments on both sides. The largest spread this filer can take with no AMT at all is about $37,400 in 2026 and about $38,200 under the 2025 rules. For the typical exercise, the new law changes nothing. Second, every extra $10,000 of spread between $300,000 and $400,000 now costs $4,200 of tentative tax, against $3,500 under the 2025 rules, which is the 42 percent zone at work.

The AMT generated by ISOs is not always lost. The spread is a timing difference: it is taxed under the AMT now and under the regular tax later, when the shares are sold. That is why the AMT it produces usually becomes a minimum tax credit, claimed on Form 8801 in a later year when the regular tax is above the tentative minimum tax. The credit comes back over time, not all at once, so a large exercise is still a cash-flow decision. If the shares have fallen by the time they are sold, it can also be a painful one.

Line 1: the senior deduction is added back, the others are not

Line 1 was split into 1a and 1b on the 2025 form, and the 2026 draft keeps the split. Line 1a takes the total deductions from Form 1040 line 14 and removes the enhanced deduction for seniors, now on Schedule 1-A line 43. Line 1b subtracts line 1a from adjusted gross income. The effect is that the AMT starts from taxable income with the senior deduction put back. The 2026 draft instructions (Reminders) explain why: the IRS treats the $6,000 deduction for filers 65 and older as a personal exemption, and personal exemptions are never allowed for the AMT.

The other three Schedule 1-A deductions, for qualified tips, qualified overtime and passenger vehicle loan interest, are not removed on line 1a, so they reduce AMT income just as they reduce regular income. The line numbers behind all four deductions moved on the 2026 draft of that schedule; they are mapped in Schedule 1-A 2026 draft, line by line. Itemizers face a separate add-back on line 2a: state and local taxes from Schedule A line 7, which in 2026 can reach the new $40,400 cap covered in Schedule A 2026 draft: what changed. A larger SALT deduction on the regular return is exactly the kind of item that pushes a high earner’s regular tax down towards the tentative minimum tax.

What 2027 looks like

Because the $1,000,000 threshold is indexed for the first time in 2027, the AMT is one of the items the IRS adjusted in its revenue procedure for tax year 2027. Revenue Procedure 2026-35, section 3.11, released November 5, 2026, sets the figures below. The inputs were the chained CPI for September 2025 through August 2026, which we track in the IRS 2027 inflation adjustments tracker, and the same method had reproduced all four 2026 AMT figures on the draft exactly ($140,200, $90,100, $244,500 and the $1,000,000 base).

2027 figure	Official (Rev. Proc. 2026-35, § 3.11)	Our eleven-month projection	October 2025 imputed (not used by the IRS)
Exemption, joint / single / separate	$144,700 / $93,000 / $72,350	$144,700 / $93,000 / $72,350	$144,500 / $92,900 / $72,250
26% bracket ends (separate)	$252,500 ($126,250)	$252,500 ($126,250)	$252,100 ($126,050)
Phase-out starts, joint / other	$1,031,900 / $515,950	$1,032,400 / $516,200	$1,031,200 / $515,600
Exemption fully gone, joint / unmarried / separate	$1,321,300 / $701,950 / $660,650	$1,321,800 / $702,200 / not shown	$1,320,200 / $701,400 / not shown

The exemptions and the 26 percent bracket matched our eleven-month projection exactly: the IRS averaged the eleven published months and left the missing October 2025 index out. The phase-out threshold was the one miss. It divides by the 2025 average, and for amounts whose base year is 2025 the IRS used the revised 2025 window average that BLS shows now (177.206), not the 177.11 it used last year. This page had flagged that possibility; with the revised divisor the joint threshold is $1,031,900, $500 lower than the $1,032,400 we projected, and the threshold for everyone else is $515,950, not $516,200. The “fully gone” points follow from the threshold: $1,031,900 plus 2 × $144,700 is $1,321,300 for joint returns, $515,950 plus 2 × $93,000 is $701,950 for unmarried filers, and $515,950 plus 2 × $72,350 is $660,650 for separate filers. The threshold rises by $31,900 for joint returns, the exemption by $4,500, and the 42 percent zone stays where it is.

What the 2026 draft instructions say

The draft Instructions for Form 6251 (2026), whose footer is dated Nov 6, 2026, are now on the IRS site, and the worksheet and the line instructions confirm the main points of this page. The Reminders section says the enhanced deduction for seniors is reported on Schedule 1-A, line 43, and “is treated as a personal exemption that is added back to alternative minimum taxable income (AMTI),” which is why line 1 was split into 1a and 1b. The What’s New section gives the same exemption amounts as the draft form ($90,100, $140,200 and $70,100) and the same 26 percent bracket, $244,500 ($122,250 if married filing separately). For married filing separately, the line 4 rule described above is now spelled out, with an example: if line 4 is $660,200, you enter $670,200, because the additional $10,000 is 50 percent of $20,000.

One warning for readers who use the instructions as a source. The draft contradicts itself on where the phase-out begins. The What’s New section says the amount used to determine the phase-out “has increased to $680,200 ($1,280,400 if married filing jointly or qualifying surviving spouse),” and the chart for Form 1040-NR filers under line 5 prints $680,200, $1,280,400 and $640,200. Yet line 3 of the Exemption Worksheet asks for “$500,000 if single or head of household; $1,000,000 if married filing jointly or qualifying surviving spouse; or $500,000 if married filing separately,” and so does the draft Form 6251 itself. The first set of numbers is where the exemption reaches zero, not where it starts to shrink, and the word “increased” is wrong in any case: the starting threshold fell from $626,350, and the point where the exemption reaches zero fell from $978,750. In the 2025 instructions the same sentence gave the starting threshold, $626,350. The worksheet is the reading that matches the statute: 26 U.S.C. 55(d)(4)(A)(ii) substitutes “$1,000,000” for “$150,000” in the threshold and “50 percent” for “25 percent” in the rate. Use $500,000 and $1,000,000 as the start of the phase-out, and treat $680,200 and $1,280,400 as the end point. A single 1040-NR filer who followed the chart literally, with line 4 between $500,000 and $680,200 ($500,000 to $640,200 if married filing separately), would enter the full exemption and could understate the AMT. We expect the final instructions to correct the chart.

The draft Form 1040 for 2026, posted September 17, 2026, reaches this form in two ways. Line 14, the total that Form 6251 line 1a starts from, now also adds a new line 12f, the charitable deduction for filers who do not itemize. And the Schedule 1-A total moves to Form 1040 line 13a, with the qualified business income deduction on 13b, the reverse of 2025; line 1a of Form 6251 is unaffected because it names the Schedule 1-A line directly. The draft instructions describe line 1a as the difference between line 14 of the Form 1040 and line 43 of Schedule 1-A.

Sources

• Rev. Proc. 2026-35, § 3.11 — irs.gov/pub/irs-drop/rp-26-35.pdf, released November 5, 2026
• IRS news release IR-2026-133, November 5, 2026 — irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2027-taxpayers-continue-to-benefit-from-the-working-families-tax-cuts
• Internal Revenue Service — Draft Instructions for Form 6251 (2026), footer dated Nov 6, 2026, “What’s New,” “Reminders,” line 1, line 4 and line 5 instructions; Draft Form 6251 2026, created May 26, 2026; Form 6251 2025, created September 17, 2025; Instructions for Form 6251 (2025), “What’s New,” line 1, line 4 and line 5 instructions
• Internal Revenue Service — Revenue Procedure 2024-40, 2025 tax rate tables (worked example, 2025 column)
• Legal Information Institute, Cornell Law School — 26 U.S.C. 55, including subsection (d)(4) and the 2025 amendment note for Public Law 119-21 section 70107(d)
• Bureau of Labor Statistics — chained CPI-U, series SUUR0000SA0, September 2024 through August 2026, as used in the IRS 2027 inflation adjustments tracker