Planning Ahead: How the 2026 Tax Changes May Trigger AMT
By Bob Marsh
As many of our clients know, several provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to sunset at the end of 2025. One area that deserves special attention is the Alternative Minimum Tax (AMT).
What’s Changing?
- Higher risk of AMT starting in 2026: The TCJA significantly reduced the number of people impacted by AMT. But once those provisions expire, the exemption amounts drop, and more income will fall into AMT range.
- Deductions come back into play: Higher state and local tax (SALT) deductions and miscellaneous itemized deductions may push more taxpayers into AMT.
- Bracket creep: With lower AMT thresholds returning, even upper-middle income earners could be impacted—especially in high-tax states.
Who Should Pay Attention?
- Executives with equity compensation (ISOs, stock options).
- Real estate professionals using large depreciation deductions.
- High-income earners in high-tax states (NY, NJ, CA, MA, etc.).
- Taxpayers with significant miscellaneous deductions.
Planning Opportunities
We are actively working with clients to:
- Project 2026 forward tax exposure now to avoid surprises.
- Review entity structures for businesses and real estate holdings to minimize exposure.
- Strategically time income and deductions between 2024–2025 versus post-2026.
- Evaluate charitable strategies, trusts, and gifting that can reduce taxable income subject to AMT.
Bottom Line
The AMT “net” is scheduled to expand again in 2026, and many who have been unaffected in recent years could find themselves facing unexpected tax bills. Now is the time to model forward and create strategies that protect you before the rules change.