Form 4626 is the corporate alternative minimum tax form. A corporation uses it to test whether it's an applicable corporation under section 59(k), which broadly means average adjusted financial statement income (AFSI) above $1 billion over 3 years, and if it's one, to calculate the corporate AMT at 15% of AFSI. Most small and mid-size corporations can skip it using the filing exclusions or the IRS safe harbor.
Every threshold here comes from the IRS Instructions for Form 4626 (2025), dated January 2026, as of October 2026.
Who has to file Form 4626
The default is that every corporation files unless an exclusion applies. The exclusions are:
- S corporations, which file Form 1120-S and aren't subject to this test
- regulated investment companies and real estate investment trusts
- tax-exempt entities with no unrelated business taxable income that don't have to file an exempt organization business income tax return
- a corporation that isn't an applicable corporation under the interim simplified method or the simplified method, and chooses to use that method
That last exclusion has a trap. It doesn't help a corporation that's an applicable corporation this year only because it was one in an earlier year.
The tests in plain numbers
| Test | Threshold (3-year average annual AFSI) |
|---|---|
| General AFSI test | More than $1 billion |
| Foreign-parented group, first test | More than $1 billion, counting the whole foreign-parented group |
| Foreign-parented group, second test | $100 million or more for the US corporation and its controlled group |
| Simplified method | $500 million in place of $1 billion, and $50 million in place of $100 million |
| Interim simplified method (safe harbor) | $800 million in place of $1 billion, and $80 million in place of $100 million |
For the general test, AFSI of every member of the controlled group treated as a single employer is added in. A corporation that's existed for less than 3 years averages over the years it did exist, and short years are annualized.
The safe harbor that ends the job early
New for 2025 is the interim simplified method, which lifts the safe harbor threshold to $800 million. The instructions include a worksheet: start with consolidated net income or loss on the applicable financial statement for each of the 3 preceding years, make a short list of adjustments for consolidating entries, certain taxes, certain credits, tax-exempt entities and mismatched year-ends, then average. If the 3-year average isn't more than $800 million, and the corporation isn't in a foreign-parented group, it meets the safe harbor and doesn't complete Form 4626.
The worksheet comes with one hard stop: a corporation that's already been an applicable corporation in the current or a prior year must prepare Form 4626 and can't use it.
How the tax itself works
- Start from AFSI, the income on the corporation's financial statements with the adjustments in section 56A.
- Reduce AFSI by financial statement net operating loss carryovers, limited to 80% of AFSI before that reduction.
- Multiply by 15% to get the tentative minimum tax, then subtract the CAMT foreign tax credit.
- Compare with regular tax plus the base erosion minimum tax; the excess is the corporate AMT.
- Track any AMT paid, because it can become a credit in later years on Form 8827.
When and where it's filed
Form 4626 is attached to the corporation's income tax return, usually Form 1120, or to an exempt organization business income tax return where that applies, and it's due with that return including extensions. For a consolidated group, the corporate AMT is calculated on a consolidated basis. If the corporation is in a controlled group, it ticks Item A and completes Part V.
Guidance that changed the 2025 form
- Item C is new on the form.
- Notice 2025-28 simplified how partnerships and their corporate partners work out AFSI.
- Notice 2025-46 covers domestic corporate transactions, financially troubled companies, consolidated groups and acquired losses.
- Notice 2025-49 sets rules for certain AFSI adjustments and for relying on the proposed regulations of September 2024, which aren't final yet.
Five mistakes the instructions guard against
- Testing the corporation alone. For applicable corporation status, the AFSI of every member of the controlled group treated as a single employer is added in.
- Assuming last year's answer resets. A corporation can be an applicable corporation this year because it was one in an earlier year, which is why the safe harbor worksheet tells it to stop.
- Forgetting short years. AFSI for a year of fewer than 12 months is annualized, and a corporation in existence for less than 3 years averages over the years it existed.
- Leaving foreign-parented groups to the general test. A US member of a foreign-parented multinational group has its own pair of tests, with the $100 million figure applied to the US side.
- Counting all of an exempt organization's income. For an organization taxed under section 511, AFSI only takes in the income of an unrelated trade or business.
The financial statement loss rule also catches people: losses from tax years ending after 2019 carry forward as financial statement net operating losses, and they're used up against 80% of AFSI each year whether or not the corporation was an applicable corporation that year.
The verdict
If your group's financial statement income averages well under $800 million, run the safe harbor worksheet once, keep it on file and don't file Form 4626. If you're anywhere near $1 billion, or you've ever been an applicable corporation, this is a specialist return built on financial statements rather than tax returns, and the notices issued in 2025 change the numbers, so get your auditor and tax team working from the same AFSI figure early.
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Frequently asked questions
What is Form 4626 used for?
It's used to determine whether a corporation is an applicable corporation under section 59(k) and to calculate the corporate alternative minimum tax when it qualifies.
What is the corporate AMT rate?
The tentative minimum tax is 15% of AFSI, reduced by the CAMT foreign tax credit.
Does a small corporation need to file Form 4626?
Not if it meets a filing exclusion, such as the interim simplified method safe harbor of $800 million average AFSI, and it's never been an applicable corporation.
Do S corporations file Form 4626?
No. S corporations, RICs and REITs are excluded from filing it.
When is Form 4626 due?
It's attached to the corporation's income tax return and filed by that return's due date, including extensions.
What is AFSI?
Adjusted financial statement income: the net income or loss on the corporation's applicable financial statement, with the adjustments set out in section 56A.
What is the safe harbor threshold for Form 4626?
Under the interim simplified method, a corporation whose 3-year average AFSI isn't more than $800 million, and that isn't in a foreign-parented group, doesn't complete Form 4626.
