2025 AMT Exemption: Key Figures for RTP Equity (Especially ISO) Clients
TY 2025 AMT exemption: MFJ $137,000 / single $88,100. TY 2026 phaseout starts earlier. ISO exercises often hit Form 6251. Compliance planning.
Author: YCL CPA ｜ YCL Tax, Accounting & Advisory
Bottom line in one breath
Federal AMT has its own exemption and phaseout. TY 2025 (Rev. Proc. 2024-40): MFJ exemption $137,000 (phaseout starts $1,252,700); single $88,100 (starts $626,350). TY 2026 (IR-2025-103): MFJ about $140,200 (phaseout starts $1,000,000); single about $90,100 (starts $500,000)—phaseout begins earlier. For Cary / RTP ISO holders, the bargain element at exercise often enters Form 6251 even when regular tax does not yet recognize income. That is exercise-year cash-flow compliance planning, not a promised tax cut.
Background
AMT runs parallel to regular tax; you effectively pay the higher liability. Rev. Proc. 2024-40 set 2025 exemptions; IR-2025-103 published 2026 amounts (including OBBB-related revisions). Triangle equity packages often mix RSUs with ISO/NSO: RSUs usually create W-2 wages at vest; ISO exercises are the classic AMT trigger.
Old vs. new
1. 2025 exemption: MFJ $137,000; single $88,100; MFS $68,500.
2. 2025 phaseout start: MFJ $1,252,700; single/MFS $626,350.
3. 2025 28% AMT breakpoint: excess AMTI above $239,100 (MFS $119,550) (RP 2024-40).
4. 2026 (newsroom summary): single exemption $90,100, phaseout from $500,000; MFJ $140,200, phaseout from $1,000,000. Full tables 待核 RP 2025-32.
5. ISOs: Bargain element is commonly an AMT preference; later sale years interact with regular tax and AMT credit (Form 8801)—facts matter.
6. RSUs: Vest wages usually already in regular tax; AMT “surprises” are often smaller than ISO exercise years, but still model the full form.
7. North Carolina: Do not assume federal AMT equals state tax (待核 NC rules).
Self-check: does this affect you?
1. You hold ISOs and plan a large exercise (without immediate sale).
2. Same-year stacking of RSU vests, bonuses, and exercises.
3. AMTI near phaseout thresholds.
4. Prior-year AMT credit carryforwards.
5. Job change / accelerated vesting compressing the calendar.
Simplified example (illustration only)
MFJ taxpayer in 2025 with moderate regular taxable income but ~$200,000 ISO bargain element in AMTI:
1. Start from the $137,000 exemption (illustration).
2. Other AMTI may shrink the exemption in the phaseout range.
3. Tentative AMT vs regular tax → pay the higher; later years may yield AMT credit—no guarantee of full recovery.
Form 6251 required; this is not a filing substitute.
Action timeline
1. Before exercise: Model exercise-only vs exercise-and-sell regular vs AMT.
2. TY 2025: Use RP 2024-40 exemption/phaseout.
3. TY 2026: Switch to IR-2025-103 figures; note earlier phaseout starts.
4. Keep: Exercise notices, FMV, Form 3921, 1099-B.
5. Multi-state / cross-border: Separate from federal AMT (待核).
What YCL can do
1. Form 6251 framework for ISO/RSU mixes.
2. Exercise-year estimated-tax / cash-flow checks including AMT.
3. AMT credit (Form 8801) carryforward orientation.
4. Bilingual Cary + Shanghai support.
5. CPA Chenchen Liu and Gloria; Free Consultation.
FAQ
Q: Do RSU vests always trigger AMT?
A: Not necessarily—RSUs often already hit regular wages. ISO exercises are the more common AMT focus. Still run the form.
Q: Higher exemptions mean I am safe from AMT?
A: No. Large preferences or phaseout can still create AMT; 2026 phaseout starts earlier.
Q: Can I get AMT back later?
A: Sometimes via the minimum tax credit in later years—amount and timing are not guaranteed.
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Disclaimer
This article is general tax information only and is not tax, legal, or investment advice for any person or business. Application depends on filing status, facts, and current IRS, SSA, and NCDOR guidance. Items marked 待核 require pre-filing verification. Consult a licensed professional for advice specific to you.
Questions this article answers
Do RSU vests always trigger AMT?
Not necessarily—RSUs often already hit regular wages. ISO exercises are the more common AMT focus. Still run the form.
Higher exemptions mean I am safe from AMT?
No. Large preferences or phaseout can still create AMT; 2026 phaseout starts earlier.
Can I get AMT back later?
Sometimes via the minimum tax credit in later years—amount and timing are not guaranteed.
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