Accounting

How to calculate the new alternative minimum tax under OBBBA

Published

9 months ago

October 20, 2025

The alternative minimum tax represents one potential caveat to the widespread and, mostly, correct belief that the One Big Beautiful Bill Act cut everyone’s payments to Uncle Sam.

Below are five key questions for financial advisors, tax professionals and clients to help them understand their potential AMT exposure. OBBBA tweaked the rules in ways that will hike the number of households subject to it.

The level of liability will not reach the days before the Tax Cuts and Jobs Act of 2017. However, the adjustments may prompt some clients to speed up their collection of certain income to this year, rather than waiting until it could bring higher taxes in 2026 or beyond.

For example, the rising deduction for state and local taxes under OBBBA will indeed reduce federal income liabilities in the traditional or basic system for households in high-tax areas in places like New York, Chicago and Los Angeles. But the AMT brings an alternative set of rules that add items like those hotly debated SALT breaks of up to $40,000 and the standard deduction back into a household’s income. So that means OBBBA’s rules could bring higher taxes for some households in those high-tax states, according to Ben Henry-Moreland, a former planner who’s a senior financial planning nerd with the Kitces.com blog.

“Having an unlimited SALT deduction prior to the TCJA meant that people who just lived in a higher-tax state often found themselves subject to the alternative minimum tax,” he said. “We’re going to see, I think, more people become subject to the AMT because of that than the actual changes to the AMT itself.”

The main new AMT payers

The SALT deductions, incentive stock option compensation and interest income from private activity bonds amount to the most common possible reasons that households could be newly eligible for the AMT next year, according to Henry-Moreland and Holly Swan, the head of wealth solutions in the global client strategy unit of asset management firm Allspring Global Investments. But the rules often prove complicated, to the point that Swan, who created a helpful checklist of AMT guidelines for advisors and clients, heard another tax pro comparing the AMT to a torpedo. They could already be causing changes to their plans for this tax year.

“We might see a lot of people who have ISOs wanting to exercise this year, so that they’re not opting into the new AMT regime,” Swan said. “And then we might see people who have favored private activity bonds, which can have higher interest rates, reconsidering that or just adjusting the math on how they look at the after-tax yield on those rates.”

No one can say for sure, though, by how much the roughly 150,000 to 250,000 households paying the AMT since the 2017 law will increase under OBBBA’s new rules. They just know that the number is much lower than in the absence of the megalaw, according to Garrett Watson, a senior policy analyst and modeling manager at the nonprofit, nonpartisan Tax Foundation.

“More people will fall into it than this year,” he said of the AMT. “There are more folks falling into the AMT next year than this year, although way fewer than there would have been, had the previous law expired.”

Scroll down the page to see five key questions for financial advisors, tax professionals and their clients to consider on the alternative minimum tax, or read the main feature story, “‘Stealth’ tax is back: An advisor primer on the alternative minimum tax.” For a look at how advisors can ensure they’re maintaining the boundary between tax guidance and tax advice, click here.

Got the glossary straight?

In addition to its wonky acronym, the AMT has spawned two other terms that do not apply to anything else in finance.

The “tentative minimum tax payment” refers to a taxpayer’s potential liability under the AMT, and that number is “tentative” because they will only need to pay that amount if it turns out to be higher than their basic federal income tax.

The other jargon revolves around “preference items,” which are deductions, credits and other tax incentives that households must add back to their income for purposes of the AMT. Some of the most common preference items are: the deduction for state and local taxes, incentive stock options, interest income from private activity bonds and the standard deduction.

What is the client’s AMT income?

To find their specific income under the AMT, clients must add those preference items back to their traditional income. Then they can calculate whether they are eligible for any exemptions.

What is the exemption, and what is the phaseout?

OBBBA’s boost of the state and local tax deduction will likely bring more households into the AMT’s purview, so they’ll need to understand their level of exemption and the level of income that causes the exemption to phase out at the upper income ranges.

In 2025, the first $88,100 for individuals and $137,000 for couples out of their income for AMT purposes is exempt. But that exemption phases out at 25 cents per dollar, starting at $626,350 for individuals and $1,252,700 for married households filing jointly.

In 2026, inflation adjustments to the exemption will push the numbers up to $90,100 for single filers and $140,200 for couples. But the phaseout begins at lower levels — $500,000 for individuals and $1 million for spouses — and the exemption goes away twice as quickly, at 50 cents on the dollar above those levels of AMT income.

What is the client’s AMT liability?

Once the taxpayers have subtracted any exemptions from their AMT income, they can calculate how much of that will be subject to 26% or 28% rates.

For 2025, the first $119,550 of AMT income for single filers and the first $239,100 for couples will be taxed at 26%, with any other income getting hit at a 28% rate. In 2026, those numbers will go up to $122,250 for single filers and $244,500 for joint households.

If the client has received any foreign AMT tax credits, they will then reduce that amount of that credit from the resulting number to find their tentative AMT liability.

Which will the client pay, the traditional income tax or the AMT?

They will, most likely, pay the traditional federal income tax bill to Uncle Sam. However, if the dollar amount of their AMT liability is higher than their standard federal income tax bill, the clients will be among the several millions or so households that must now pay under the alternative system.

Accounting

Continuous Auditing Transforms Corporate ERPs

Published

4 days ago

July 21, 2026

Business Finance News

continuous auditing transforms corporate erps

As corporate accounting departments cross the threshold into late July 2026, the adoption of continuous, automated auditing systems has reached a definitive turning point. Driven by advances in artificial intelligence and deep integration with modern Enterprise Resource Planning (ERP) platforms, leading finance organizations are moving away from traditional, periodic post-hoc audits in favor of real-time, 100% transactional verification. This technological transition is redefining internal control environments, reducing compliance costs, and eliminating the structural delays inherent in legacy quarterly closing processes.

Unlike traditional auditing frameworks that rely on statistical sampling—a process that inevitably leaves operational blind spots—continuous auditing software monitors operational data feeds continuously. Every purchase order, electronic invoice, payroll disbursement, and cross-border wire transfer is automatically cross-referenced against established corporate governance parameters, regulatory tax schedules, and anti-fraud algorithms in real time. Anomalies or unauthorized ledger entries are flagged instantly, allowing internal audit teams to investigate and remediate compliance gaps immediately rather than months after the close of a financial period.

The implications for executive financial management are far-reaching. By embedding continuous verification directly into daily transaction workflows, chief financial officers gain uninterrupted visibility into the organization’s true financial standing. Real-time balance sheet auditing eliminates the severe operational bottlenecks associated with month-end and quarter-end financial reconciliations, freeing accounting professionals to focus on strategic financial modeling, tax planning, and capital allocation rather than manual data entry and spreadsheet consolidation.

However, implementing continuous auditing requires accounting leadership to invest heavily in data governance and technical upskilling. Internal audit teams must evolve from manual ledger reviewers into system architects capable of auditing complex algorithms and validating automated data pipelines. Accounting firms and corporate controllers that master continuous auditing will establish a resilient compliance framework capable of meeting stringent international regulatory standards with total transparency.

Accounting

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

Published

4 days ago

July 20, 2026

Business Finance News

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

WASHINGTON — In a major escalation of cross-border trade friction, U.S. President Donald Trump has signed executive orders imposing new 50% tariffs on a wide selection of Canadian exports, citing discriminatory practices by Ottawa targeting American auto, dairy, and beverage industries.

The new duties, announced Monday, will take effect in 30 days. They target a broad spectrum of consumer and industrial goods—ranging from wine, liquor, and milk products to commercial cement, furniture, clothing, and hockey equipment.

Untested Legal Mechanism

To enact the sweeping measures, the administration invoked Section 338 of the Tariff Act of 1930—a rarely used legal provision allowing the executive branch to levy additional tariffs of up to 50% on foreign nations deemed to discriminate against U.S. commerce.

White House officials noted that Section 338 addresses trade discrimination rather than national security or economic emergencies. The move comes months after prior global emergency tariffs faced legal challenges in domestic courts, signaling Washington’s pivot toward alternate statutory authorities to maintain import duties.

Senior administration officials briefed reporters that the measure directly responds to Canadian provincial bans on U.S. alcohol, restrictions on American vehicle exports, and import quota disparities affecting U.S. dairy and cheese producers relative to third-party trading partners.

“While the administration continues to secure reciprocal trade agreements globally, Canada retaliated against efforts to protect domestic industry,” U.S. Trade Representative Jamieson Greer stated.

USMCA Impact and Carve-Outs

Significantly, the newly ordered 50% duties will apply to designated items even if they otherwise comply with the United States-Mexico-Canada Agreement (USMCA).

However, the administration confirmed key targeted exemptions:

Energy products (including oil and natural gas)
Potash and critical minerals
Fish and seafood
Goods already governed by sector-specific duties (such as existing steel and aluminum tariffs)

Administration representatives emphasized that the tariffs do not stem from recent disputes concerning drifting Canadian wildfire smoke, noting that policy options regarding environmental spillover remain under separate review.

Canadian Response and Market Reaction

Following the White House announcement, the Canadian dollar experienced a sharp decline against the U.S. dollar, falling approximately 0.4% during evening trading.

Canadian Prime Minister Mark Carney issued a statement emphasizing that Canada’s earlier counter-duties had merely matched previous U.S. trade actions. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens,” Carney stated, pointing to detailed proposals Ottawa submitted to modernize the USMCA framework.

Ontario Premier Doug Ford took a firmer stance, urging a “dollar-for-dollar” reciprocal response if the measures go into effect on August 19.

With a 30-day implementation window before the duties officially lock in, industry associations and trade groups on both sides of the border are calling for urgent bilateral negotiations to avert further supply chain disruption across North America.

Accounting

Automated Continuous Auditing: Transforming Compliance and Real-Time Financial Oversight

Published

4 days ago

July 20, 2026

Business Finance News

Transforming Compliance and Real-Time Financial Oversight

The traditional accounting paradigm—defined by periodic monthly closures and post-hoc annual audits—is rapidly giving way to continuous, automated financial oversight. As of July 2026, forward-thinking accounting practices and multinational corporate finance departments are leveraging continuous auditing systems powered by advanced machine learning models. These systems monitor operational transactions in real time, shifting audit methodologies from sample-based post-analysis to absolute, 100% transaction-level verification.

The operational advantages of continuous auditing are transformative. Standard auditing procedures historically relied on statistical sampling, which, despite rigorous methodology, inherently left gaps where anomalies or fraudulent transactions could go undetected for months. Modern continuous auditing platforms integrate directly with enterprise resource planning (ERP) databases, instantly cross-referencing purchase orders, invoices, bank feeds, and tax records. Any deviation from established control parameters or unusual transaction behavior triggers immediate flags for internal audit teams, dramatically reducing detection lag from quarters to seconds.

Beyond fraud prevention, continuous auditing fundamentally alters internal reporting and decision-making. Executive leadership no longer has to wait weeks after the close of a quarter to evaluate precise financial standing; real-time verified ledger data provides an uninterrupted view of operating margins, tax liabilities, and cash flow dynamics. This real-time visibility enables corporate controllers to adjust capital allocation strategies dynamically, mitigating liquidity constraints and capitalizing on emerging commercial opportunities far more efficiently than competitors bound to legacy reporting cycles.

However, implementing continuous auditing requires accounting professionals to acquire new analytical capabilities. The role of the auditor is evolving from manual data reconciliation toward system validation, algorithmic model governance, and strategic risk interpretation. Accounting firms and corporate finance departments must invest in continuous technical education, ensuring that audit staff possess the data engineering skills necessary to design, maintain, and evaluate complex automated compliance systems.