With no major overhauls to deductions and limits, calculating your AMT remains relatively the same, with a few key exceptions
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The below article reflects the updated federal tax code as of the ‘Last Updated’ date mentioned at the top of this article. There is a strong possibility of additional changes to the tax code between now and 2024, which may or may not be captured here.
2022 AMT Specific Changes to the Tax Code
| Single | 2022 Numbers | 2021 Numbers |
|---|---|---|
| AMT Exemption | $75,900 | $73,600 |
| AMT Exemption Phaseout Threshold | $539,900 | $523,600 |
| Tax Rates | 26% & 28% | Unchanged |
| 26/28% Tax Bracket AMTI Cutoff | $206,100 | $199,900 |
| Married Filing Separately | 2022 Numbers | 2021 Numbers |
|---|---|---|
| AMT Exemption | $59,050 | $57,300 |
| AMT Exemption Phaseout Threshold | $539,900 | $523,600 |
| Tax Rates | 26% & 28% | Unchanged |
| 26/28% Tax Bracket AMTI Cutoff | $103,050 | $99,950 |
| Married Filing Jointly | 2022 Numbers | 2021 Numbers |
|---|---|---|
| AMT Exemption | $118,100 | $114,600 |
| AMT Exemption Phaseout Threshold | $1,079,800 | $1,047,200 |
| Tax Rates | 26% & 28% | Unchanged |
| 26/28% Tax Bracket AMTI Cutoff | $206,100 | $199,900 |
As with most of the changes to the tax code year over year, the AMT specific line items were adjusted for inflation, which is and continues to be a hot button topic for the year. Across the board, you’ll see relief in almost every categories for more ‘lenient’ tax rates and deductions.
To start, the AMT Exemption saw a boost of $2,300 / 1,750 / 3,500 for ‘Single / Married Filing Separately / Married Filing Jointly’ coupled with an increase in the Phaseout Threshold. And as a reminder, the Phaseout Threshold is essentially the number at which for every dollar your AMTI (Alternative Minimum Taxable Income) exceeds the threshold the eligible exemption you can take reduces by 25 cents.
The 2 tax rates remain unchanged in 2022, staying at 28% and 26% but the income bracket cutoff has increased by $6,200 for both Single and Married Filing Jointly folks, while only increasing by $3,100 for Married Filing Separately individuals. This means more of your AMTI will be taxed at just 26% and not 28%.
If any of these terms are confusing here is a refresher as to what the differences between the AMT tax code vs your regular federal income tax code is.
As per usual, the AMT tax code seems to ‘favor’ Single filers as you get the most bang for your buck here in terms of relative increases in deductions and tax bracket cutoffs. In addition, it is interesting to note that Married Filing Jointly couples have the same 26/28% tax rate income cutoff as single people, whereas married filing separately filers have to deal with reduced benefits.
2022 Relevant changes to other parts of the tax code
Although the changes below aren’t specific to AMT, here is a list of eligible deductions that influence your resulting AMTI used for tax calculation purposes, and so are worth mentioning.
Please note this is not an exhaustive list, but rather the list that this website takes into account when making calculations using our AMT Calculator AMT Calculator.
| Single | 2022 Numbers | 2021 Numbers |
|---|---|---|
| Traditional 401k Contribution Limit | $20,500 | $19,500 |
| Traditional IRA Contribution Limit | $6,000 | Unchanged |
| HSA Contribution Limit | $3,650 | $3,600 |
| Student Loan Interest Deduction | $2,500 | Unchanged |
| Mortgage Interest Deduction | Max at $750,000 principal | Unchanged |
| Married Filing Separately | 2022 Numbers | 2021 Numbers |
|---|---|---|
| Traditional 401k Contribution Limit | $20,500* | $19,500* |
| Traditional IRA Contribution Limit | $6,000* | Unchanged |
| HSA Contribution Limit** | $7,300 | $7,200 |
| Student Loan Interest Deduction | Cannot Take Deduction | Unchanged |
| Mortgage Interest Deduction | Max at $750,000 principal | Unchanged |
| Married Filing Joinly | 2022 Numbers | 2021 Numbers |
|---|---|---|
| Traditional 401k Contribution Limit | $20,500* | $19,500* |
| Traditional IRA Contribution Limit | $6,000* | Unchanged |
| HSA Contribution Limit** | $7,300 | $7,200 |
| Student Loan Interest Deduction | $2,500 | Unchanged |
| Student Loan Interest MAGI Max | $175,000 | $170,000 |
| Student Loan Interest MAGI Phaseout | $145,000 | $140,000 |
| Mortgage Interest Deduction | Max at $750,000 principal | Unchanged |
* The limits listed her contribution limits per individual
** For HSAs it is possible that both people contribute to a family HSA. The owner of the HSA can take the deduction, so in theory one person can take the full deduction
For the vast majority of these general deductions, there was no major change to the contribution limits or deduction amounts you can take. 401k limits ticked up by $1,000 whereas IRA contribution limits remained the same. It’s worth noting that for high income earners, the Mega Backdoor Roth 401k and Backdoor Roth IRA may be going away with the Build Back Better plan of the current Biden administration so it is worth monitoring that as we progress into the future.
HSA contributions ticked up slightly, $50 for single filers, and $100 for married filers.
Worth nothing that ‘Married Filing Separately’ filers still cannot take advantage of the student loan interest deduction yet again, for reasons I cannot explain.
And speaking of the SLI, the only change for this year is in the ‘Married Filing Jointly’ category, where the MAGI phaseout and max thresholds went up by a bit. Similar to the AMT Exemption Phaseout Threshold, this is the threshold by which if your MAGI exceeds the phaseout number, the amount of student loan interest you can deduct goes down by some amount. In addition, if you exceed the MAGI Max, you cannot take the SLI deduction at all.
Remembering all of these changes can be difficult to do, especially year over year. Luckily our AMT Calculator AMT Calculator handles all of the backend limits, deductions, and calculations for you. What are you waiting for? Get started today!