Alternative Minimum Tax (AMT) Calculator Canada

When the alternative minimum tax applies

The alternative minimum tax is a second calculation of federal tax that runs alongside the ordinary one, and you pay whichever is larger. It stops a very high income made up of lightly taxed items from producing a very small tax bill. Since the rules were redesigned in 2024 it reaches fewer people but takes more from those it does reach.

Most taxpayers never meet it. The exemption equals the start of the fourth federal bracket, $181,440 for 2026, so ordinary salary income does not come close. What brings people into range is a year unlike their others: a business sale, a cottage sale, a stock option exercise, a large gift of appreciated shares.

This calculator runs both computations side by side on the figures you enter and reports the gap.

How the minimum tax base is built

The starting point is ordinary taxable income, line 26000 of your return. The minimum tax then adds back the parts of that figure the rules treat as too generous.

The largest add-back is capital gains. Ordinary tax includes half of a capital gain; the minimum tax includes the whole gain. On a $500,000 gain that adjustment alone adds $250,000 to the base, which is why one large sale can trigger the tax.

Employee stock option benefits are treated the same way. The deduction that normally halves the taxable benefit is not available, so the whole benefit enters the base. An employee exercising options in a private company can owe tax on a benefit that has not yet turned into cash, the harshest version of the problem.

Gains on donated publicly listed securities are the third adjustment. Ordinary tax exempts that gain entirely; the minimum tax includes 30% of it. Donors who give appreciated shares are noticeably affected by the redesigned rules.

From that broader base the calculation subtracts the exemption, applies the flat 20.5% rate, and then allows half of your non-refundable credits. The result is the net minimum tax.

Reading the comparison

The chart puts regular federal tax next to net minimum tax.

If regular tax is higher, the minimum tax does nothing this year and the extra tax line reads zero. If minimum tax is higher, the difference is added to your federal bill and shown as the extra tax created by the minimum tax.

The other lines show how the calculation got there. Adjusted taxable income for AMT is the broadened base. The amount above the exemption is what the flat rate applies to. Gross minimum tax before credits is the product of the two, and credits allowed against the minimum tax is the part of your non-refundable credits the rules permit. The three add-back lines show which of your entries pushed the figure up.

With the default inputs ($300,000 of regular taxable income, which already includes the taxable half of a $500,000 capital gain, $3,000 of other credits, Ontario), the AMT base above the exemption is $368,560, net minimum tax is about $73,017 against regular federal tax of about $67,900, and the minimum tax adds about $5,117 to the federal bill, all of it carried forward.

The carry-forward, and why it usually washes out

Extra tax paid under the minimum calculation is not a permanent penalty. It becomes a carry-forward that can be applied against ordinary federal tax in any of the next seven years, limited each year to the amount by which ordinary tax exceeds that year’s minimum tax.

In the typical case that makes it a timing cost. A taxpayer with one exceptional gain year and a normal salary afterwards recovers the full amount over the following years and loses only the use of the money in between.

Recovery fails in two situations. One is a taxpayer whose income stays unusual, so ordinary tax never rises far enough above minimum tax to absorb the carry-forward before the seven years run out. The other is a final return, where there is no future year. Model both before triggering a large gain on purpose.

Enter a carry-forward from earlier years in the advanced options and the calculator shows how much of it this year can absorb and what is left.

Planning around it

The most effective response to a looming AMT year is to spread the event. Two moderate sales in two calendar years each get their own exemption, and each may stay below the level that one combined sale would exceed.

Watch the interaction with donations too. Giving appreciated securities is still efficient, but the minimum tax includes part of the gain and allows only part of the donation credit, so a very large gift in one year can create minimum tax where the donor expected a saving. Splitting a large pledge across years often works better.

Finally, check before acting rather than after. The minimum tax is predictable once the numbers are known, and a December decision made with them can save a substantial amount.

What this estimate covers

The calculator models the federal minimum tax against ordinary federal tax, with the basic personal amount and any other non-refundable credits you enter, plus ordinary provincial tax for context. It does not model provincial minimum tax, the denial of the dividend tax credit, restricted deductions such as carrying charges and limited partnership losses, or the smaller adjustments listed on form T691.

Figures on this page are estimates based on the current published rates, exemption and inclusion rates, and they are general information rather than tax advice. In a year that may involve minimum tax, speak to an accountant before the transaction.

About This Tool: Alternative Minimum Tax

Alternative minimum tax: use this tool to get an instant, accurate estimate. The figures follow official CRA guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.