Could I owe the alternative minimum tax (AMT) as a W-2 earner?

Most W-2 earners no longer hit the AMT after the exemption was raised, but it still catches certain situations. The AMT is a parallel tax system that disallows some deductions and adds back items like a large state and local tax deduction or, critically, the bargain element when you exercise incentive stock options (ISOs) and hold the shares. For 2025 the exemption is about $88,100 single / $137,000 MFJ, phasing out at higher incomes. You compute tax both ways and pay whichever is higher. The classic AMT trap is a tech employee who exercises and holds ISOs — the paper gain triggers AMT even with no cash received. If you have ISOs, model the AMT before exercising. Tax software flags AMT automatically; equity-heavy earners can plan exercises at wealthserene.com/tools/rsu-espp-calculator.