2010 and 2011 AMT Tax Brackets

AMT is Alternative Minimum Tax. The Bush tax cut extension law officially known as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (H.R. 4853) includes an AMT patch for 2010 and 2011. Congress used to patch AMT one year at a time. This time they did two years in one shot. That’s a 100% improvement!

I’m updating my AMT tax brackets table with the new patches. These tax brackets apply when you pay AMT. The rates are marginal rates, i.e. the rate you pay on your last or next dollar of income. The numbers in the first two columns are Alternative Minimum Taxable Income. For most people, it’s AGI minus deductions allowed under AMT (mortgage interest and charity donations). It’s before the AMT exemption.

2010

Married Filing Jointly Single or Head of Household AMT Income QD & LTCG*
$0 – $72,450 $0 – $47,450 0% 0%/15%
$72,451 – $150,000 $47,451 – $112,500 26% 15%
$150,001 – $227,960 $112,501 – $200,460 32.5% 21.5%
$227,961 – $439,800 $200,461 – $302,300 35% 22%
$439,801 or more $302,301 or more 28% 15%

* Qualified Dividends and Long Term Capital Gains

2011

Married Filing Jointly Single or Head of Household AMT Income QD & LTCG*
$0 – $74,450 $0 – $48,450 0% 0%/15%
$74,451 – $150,000 $48,451 – $112,500 26% 15%
$150,001 – $229,960 $112,501 – $201,460 32.5% 21.5%
$229,961 – $447,800 $201,461 – $306,300 35% 22%
$447,801 or more $306,301 or more 28% 15%

* Qualified Dividends and Long Term Capital Gains

The ranges in red are the phaseout bands. The rates are higher because you lose AMT exemptions as your income goes up. If you are subject to AMT, remember your marginal tax rate can be higher than what you think it is. Since state income tax is not deductible under AMT, to get your combined federal and state marginal tax rate, just add your marginal state income tax rate to the federal rate when you are under AMT.

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Comments

  1. Ted says

    Dumb question: Does the AMT kick in before or after credits are applied to the tax due as calculated using the normal tax brackets?

    Say I owe $9000 in regular income tax before credits (children, making work pay, energy). Those credits take my tax down to $3k. If I calculate using AMT, I get $5000 due.

    Do I owe AMT?

  2. Pete says

    Ted, if you are not completely confident you’ve done the “right” thing based on walking through the steps of the 1040, complete with the rabbit-hole instructions for the AMT, you should probably go to an accountant for help. The size of your discrepancy / zone of uncertainty is certainly large enough to warrant it — and who knows what else you may be overlooking.

    AMT is a special, Kafkaesque sort of hell, so I think it’s worth paying someone for advice and some peace of mind…

  3. Harry Sit says

    @Ted – In general, credits are applied after the “AMT vs regular” calculation is done and they apply to both regular tax and AMT. There have been some odd ball credits that only apply to regular tax but not to AMT. The form you use to calculate the credit will tell you if it applies to only regular tax or both. If you are doing this yourself, using software will make it easier.

  4. TJ says

    Yikes – I am allegedly getting a large bonus and I might get hit with AMT this year!!

    i guess its a good problem to have.

  5. Tom says

    Are the last two columns, labeled AMT income and QD & LTCG, marginal rates for the portion within the bands shown in the first two columns? (2) do the first two columns refer to AGI or taxable income or what?

  6. Loyal Reader says

    Is the AMT bracket based on gross income or net income?

    Scenario 1: Filing jointly
    For example if you gross income for married filing jointly is 80,000, but had 20,000 put into a 401K during the year so your net income would be 60.000. Would you then still have to pay the AMT based on the gross income?

    Scenario 2: Filing jointly
    Your gross income is 50,000, and your net income is 40,000. You made 25,000 in short-term capital gains. Would this push you into the amtd based on 50,000 gross +25,000 = 75,000 or would it keep you bellow based on 40,000 net + 25,000 short term stock gains ?

    Thanks for a great blog with relevant practical topics!

  7. Tom says

    My previous questions are partly based on the idea that the income cutoff between AMT 26% and AMT 28% for singles was abut $175,000; but your rates and brackets are different. Your rates must be AMTI effective marginal rates, thus the income brackets are AMTI–duh, one can see the first tiers are the new exemption amounts, $47,450 and $48,450 (for ’10 & ’11). Or are they AGI minus AMT preferences? Not sure definition of AMTI–guess I should look at a 6251.

  8. Harry Sit says

    @Tom – The rates are marginal rates, i.e. the rate you pay on your last or next dollar of income.

    The numbers in the first two columns are AMTI – Alternative Minimum Taxable Income. For most people, it’s AGI minus deductions allowed under AMT (mortgage interest and charity donations). It’s before the AMT exemption. Once you get into the phaseout range, for every four dollars of income, you lose one dollar in the AMT exemption. That makes your marginal AMT rate higher than the official 26% and 28%.

    @Loyal Reader – Thank you for being loyal! :) The 401k contributions aren’t shown on tax forms. All the incomes here are after 401k contributions. However, income alone doesn’t necessarily put you in AMT. AMT is usually caused by having kids, high state income tax and high property tax — all of them are not deductible under AMT.

  9. Mark says

    As far as taking tax credits with AMT. I’ve always thought that tax credits wouldn’t take you below the “tentative minimum tax” (which basically looked like the AMT). I have a pile of Low Income Housing tax credits (section 8) that I haven’t been able to take in prior years because of the Tentative minimum tax. The years I hit the AMT, I haven’t been able to use any at all.

    Anything different for 2010-2011 ?

    Thanks.

  10. Harry Sit says

    @Mark – It depends on which credits. I’m not familiar with Low Income Housing credits. Perhaps they can’t reduce your tax below TMT, but I know other credits can.

  11. Ted Valentine says

    All I know is do not trust the major tax software clients online yet. They all give me different answers. Grrr. Does not help when I’m trying to do a large IRA conversion.

  12. TJ says

    Well I filled out the AMT form using last years form. Looks like I don’t owe anything extra despite the fact that I have more than the 47k AGI and have quite a bit of deductions.

  13. james dimaria says

    So let me get this information right. Let say you live in a heavy tax state ie ny,, and you are retired and you make $140,000 and decide to take on another job which pays you $60-90 grand what will your AMT% go from 26-32.5%? So its better you stay retired and move to a less taxed state such as North Carolina. Is this the case? I’m trying to make a decision here. Jim

  14. Harry Sit says

    @james – AMT is complicated. These rates are marginal rates if you already pay AMT. The easiest way to get an estimate for how much more taxes you will pay if you take on another job would be using tax software. If you don’t have one already, you can use the online calculator TaxCaster. Do it with and without the extra job and see the difference.

  15. Ronald Reagen says

    The ATM tax is nothing but a double taxation of the American Taxpayers!!! The IRS should be abolished taxing its citizens twice on their Adjusted Gross Income. This is nothing more than thievery by the Federal Government. Even the constiution of the United States comments on paying taxes twice on the same income.

  16. jd says

    Again we are hit with Alt Min tax simply because we pay high Illinois state income tax and high Illinois real estate tax. Nothing more. No dividend income, no capital gains, no depreciation, nothing unusual. Just W-2 income, mortgage interest, and Illinois tax. We will be paying more Illinois income tax for 2011, since the rate went up from 3% to 5%. This additional tax is not deductible for Alt Min. calculation. Also, the Alt Min income brackets do not reflect the current economy. These Alt Min brackets taxing income at the $150,000 for Married Filing Joint at higher rates can not possibly have been adjusted to keep up with inflation over the last 30 years. This Alt Min tax is a hidden tax on middle income taxpayers under the “$250,000″ threshold that seems to be the target. Even taxpayers earning between $250,000 to $400,000 should not be subject to Alt Min if the original intent was to capture the the millionaire with tax shelters and deductions who are not paying their fair share. High state income tax deduction is not a tax shelter. Fix Alt Min. If I can sell my house I heading to Tennesee.

  17. bill dannevik says

    seems odd that the upper end of the second bracket (the one for which amt is 26%) is not adjusted , while all of the others are. is this correct? probably I’m missing something here.

  18. Harry Sit says

    @bill dannevik – Yes it is correct. To verify, get Form 6251 for different years from the IRS. You will see the same $112,500 and $150,000 numbers on the forms. They don’t change. As to why, Congress wrote the law that way.

  19. Jeff says

    This table is great, should be all over the web, but this is the only place I’ve seen it. Very helpful for plannning. It’s amazing how many sites completely miss the phaseout effect when showing AMT brackets. Nice job. One nit though, I think the last bracket in 2011 for single should start at $306,301, not $302,201.

  20. Tim says

    So is it conceivable that if a taxpayer received a windfall capital gains or dividend payment at the end of the year. And that increased income pushed them to an AMT tax, then the marginal tax rate on that windfall income could be 100%?

  21. Hans says

    Can you update this for 2012 & beyond? Now that the AMT fix is permanent, it will be nice to know these early on in the year going forward.

  22. Alan says

    I would also appreciate an update for 2014 of the AMT tax brackets. Or at least an overview of the methodology to calculate the AMT tax brackets, so we can make adjustments going forward.

    Thanks!

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