Form 6251 is the IRS form for figuring the alternative minimum tax (AMT), a separate tax charged on top of your regular tax when certain tax breaks bring your regular tax too low. For 2025, the AMT exemption is $88,100 for single filers and $137,000 for married couples filing jointly, as of October 2026, and you attach the form when the AMT applies or you claim certain credits.
Most people never pay AMT, but a few events push ordinary earners into it, and exercising incentive stock options is the classic one. Everything below comes from the IRS's 2025 Instructions for Form 6251, checked in October 2026.
The 2025 numbers
| Filing status | Exemption | Exemption starts phasing out above |
|---|---|---|
| Single or head of household | $88,100 | $626,350 |
| Married filing jointly or qualifying surviving spouse | $137,000 | $1,252,700 |
| Married filing separately | $68,500 | $626,350 |
After the exemption, the AMT rate is 26% on the first $239,100 of taxable excess ($119,550 if married filing separately) and 28% above that. Your AMT is the amount by which this tentative minimum tax is more than your regular tax.
Who must attach Form 6251
- Your tentative minimum tax on line 7 is more than line 10, meaning you owe AMT.
- You claim a general business credit and line 6 or line 25 of Form 3800 is more than zero.
- You claim the qualified electric vehicle credit, the personal-use part of the alternative fuel vehicle refueling property credit, or the credit for prior year minimum tax.
- Your total of lines 2c through 3 is negative and you'd owe AMT without it.
What gets added back
AMT starts from your taxable income and adds back items that get favourable treatment under the regular tax. The common ones for individuals:
- Taxes from Schedule A, or the standard deduction if you didn't itemize.
- Interest on specified private activity bonds, which is tax-exempt for regular tax.
- The bargain element when you exercise incentive stock options and keep the shares.
- Depreciation differences, and some net operating loss and passive loss differences.
- New for 2025: the enhanced deduction for seniors on Schedule 1-A is treated as a personal exemption and added back.
The stock option trap, in the IRS's own numbers
The instructions give this example. On March 13, 2024, a single filer paid $20,000 to exercise an incentive stock option for 200 shares worth $200,000, as of October 2026. The $180,000 difference isn't taxable for regular tax. For AMT, the full $180,000 is an adjustment on that year's Form 6251, and the AMT basis in the shares becomes $200,000 while the regular tax basis stays $20,000.
That's why people with startup options can owe tax on shares they haven't sold. The two different bases also mean that when you sell, the AMT gain is smaller than the regular gain, so you have to track both sets of figures. Form 3921 from your employer shows the exercise price and share value you need: in another example, a $10 exercise price and $25 market value on 100 shares gives a $1,500 adjustment.
Credit for prior year minimum tax
Paying AMT one year can earn you a credit later. The instructions say that if you pay AMT for 2025, you may be able to take a credit on Form 8801, Credit for Prior Year Minimum Tax, for 2026. It's one reason to keep Form 6251 copies and the AMT basis records long after the year you paid.
Filling it in
- Start with your taxable income, then enter the senior deduction add-back on line 1b if it applies.
- Lines 2a to 3: add back the adjustments and preferences that apply to you, such as taxes, private activity bond interest and ISO exercises.
- Line 5: enter the exemption for your filing status, reduced if your AMT income is over the phaseout level.
- Lines 6 to 7: apply the 26% and 28% rates, using Part III if you have capital gains or qualified dividends.
- Compare with your regular tax. If the tentative minimum tax is higher, the difference goes to Schedule 2 as AMT.
- If you sold ISO shares, report the regular sale on Form 1099-B figures and track the AMT basis separately.
If you expect AMT, include it in your estimated tax payments, because it's tax due like any other.
Common Form 6251 mistakes
- Forgetting the add-back for the standard deduction or Schedule A taxes, which is often the biggest line.
- Ignoring an ISO exercise because the shares weren't sold. The adjustment applies in the year of exercise if you keep the shares past year end.
- Using the regular tax basis when selling ISO shares later. AMT basis includes the earlier adjustment.
The verdict
With exemptions of $88,100 single and $137,000 joint, AMT is rare for wage earners. The events to watch are exercising incentive stock options and holding the shares past year end, large private activity bond interest, and big depreciation differences. If any of those apply, run Form 6251 before you exercise or sell, not after, and keep both bases on file.
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Frequently asked questions
What is the AMT exemption for 2025?
$88,100 for single or head of household, $137,000 for married filing jointly or qualifying surviving spouse, and $68,500 for married filing separately.
What are the AMT tax rates?
26% on the first $239,100 of taxable excess ($119,550 if married filing separately) and 28% above that, for 2025.
Who has to file Form 6251?
You attach it if you owe AMT, claim certain credits including a general business credit or the credit for prior year minimum tax, or meet the other conditions in the instructions.
Why do incentive stock options trigger AMT?
The difference between the exercise price and the share value isn't taxable for regular tax, but it's an AMT adjustment if you keep the shares.
Is the senior deduction allowed for AMT?
No. The 2025 instructions say the enhanced deduction for seniors is treated as a personal exemption and added back to alternative minimum taxable income.
Does exercising stock options always cause AMT?
Not always, but exercising an incentive stock option and keeping the shares creates an AMT adjustment equal to the difference between the share value and what you paid.
What is the AMT exemption phaseout threshold for 2025?
The exemption starts phasing out above $626,350 for single and married filing separately, and above $1,252,700 for married filing jointly or a qualifying surviving spouse.
