The IRS says the alternative minimum tax exemption for 2027 will be $93,000 for unmarried filers and $144,700 for married couples filing jointly. The exemption starts shrinking at $515,950 of income for unmarried filers and $1,031,900 for joint filers. The agency announced the figures Nov. 5 in its yearly inflation adjustments, which generally apply to returns filed in 2028.
Both exemptions are higher than this year’s. The IRS lists the 2026 exemption at $90,100 for single filers and $140,200 for couples, with the phase-out starting at $500,000 and $1,000,000. For 2027 the exemption rises $2,900 for unmarried filers and $4,500 for joint filers, and the phase-out begins $15,950 and $31,900 higher.
The alternative minimum tax, or AMT, is a second tax calculation that exists to make sure households with high income pay at least a minimum amount. The IRS says the AMT is owed only when the tentative minimum tax comes out larger than the regular tax. Anyone unsure whether it applies can check the AMT line in the Form 1040 instructions, which is where the IRS sends taxpayers to find out.
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The 2027 AMT numbers against this year’s
The IRS put the 2027 figures in its news release on the tax year 2027 inflation adjustments, numbered IR-2026-133. For unmarried individuals, the exemption is $93,000 and the phase-out begins at $515,950. For married couples filing jointly, the exemption is $144,700 and the phase-out begins at $1,031,900.
The 2026 comparison comes from the IRS list of Working Families Tax Cuts provisions for individuals and workers, updated in August. It shows $90,100 for single filers, phased out at $500,000, and $140,200 for married couples, phasing out at $1,000,000. The step up is about 3.2% for both groups.
Put simply, a household with income well below the phase-out lines keeps the whole exemption in the AMT math. A household above them loses part of it. The 2027 lines give a little more room than this year’s before that starts.
How the second tax is worked out
The IRS describes the steps on its Topic 556 page on the alternative minimum tax, reviewed Sept. 24. Taxpayers start with taxable income, add back or reduce certain exclusions and deductions and account for timing differences. They subtract the AMT exemption, multiply the result by the AMT rates and subtract the AMT foreign tax credit.
As an illustration only, take an unmarried filer with $200,000 of income counted under the AMT rules. After the 2027 exemption of $93,000, $107,000 remains. At the 26% rate that applies to the first slice, the tentative minimum tax is $27,820. If the regular tax on the same income is lower than that figure, the difference is the AMT owed. If the regular tax is higher, no AMT is owed.
Two details can matter for investors. The IRS says AMT capital gains and qualified dividends can use the regular-tax capital gain rates when those are lower than the AMT rates that would otherwise apply. It also says some credits that reduce regular tax do not reduce AMT liability.
The AMT has two rates. The 2025 instructions for Form 6251 show 26% on the first $239,100 of AMT income after the exemption and 28% above that. The Nov. 5 release does not state where that break falls for 2027.
What sends a household to Form 6251
The AMT is figured on Form 6251, Alternative Minimum Tax for individuals. The IRS instructions say the form is needed when the tentative minimum tax is greater than the regular tax. It is also needed when a taxpayer claims the general business credit, the qualified electric vehicle credit, the personal-use part of the alternative fuel refueling property credit, or the credit for prior year minimum tax, under conditions the instructions spell out.
The instructions also show where the adjustments come from. State and local tax deductions, incentive stock option exercises and interest from specified private activity bonds each have their own line on the form. Those lines are why two households with the same paycheck can end up with different AMT results.
For 2025, the instructions put the exemption at $88,100 for single filers and $137,000 for joint filers, with the phase-out starting at $626,350 and $1,252,700 of income. The 2027 phase-out starts are lower than that 2025 starting point, even though the 2027 exemptions are higher.
A credit for AMT paid in an earlier year
Topic 556 also covers a second chance. The IRS says that a taxpayer who owes no AMT this year but paid AMT in a prior year may be eligible for a minimum tax credit against the regular tax. The form for that is Form 8801, Credit for Prior Year Minimum Tax, for individuals, estates and trusts.
The IRS page says the exemption amounts and phase-out thresholds are set by law, and the Nov. 5 release supplies the 2027 numbers. What neither says is whether a particular household will cross the line. That answer depends on a year’s income, deductions and credits, and it is worked out on Form 6251 after the year ends.
Which tax lines decide a retiree’s bill beyond the AMT?
The AMT is a high-income problem, and a retiree’s tax bill also turns on other lines: where Social Security starts being taxed, the bracket lines, the Medicare surcharge line and the required withdrawal age. Missing one of those costs real money in a year when no AMT applies.
Cut Your Retirement Tax Bill: 12 Moves is a 14-page guide that covers those lines with the 2026 numbers on one page. It names the Medicare surcharge line, where one dollar over can cost more than $1,100 a year per person, and the form to use for each of the 12 moves.
This article was produced with AI assistance and edited for accuracy against the sources linked above.
