The corporate alternative minimum tax (CAMT) is a 15% minimum tax on the adjusted financial statement income (AFSI) of corporations whose average annual AFSI over three years exceeds $1 billion. A corporation owes CAMT only when 15% of its AFSI, less the CAMT foreign tax credit, is higher than its regular federal income tax plus any base erosion tax.
The corporate alternative minimum tax applies to tax years beginning after December 31, 2022. As of October 2026, it still runs on the statute, the September 2024 proposed regulations and a series of IRS notices, with no final regulations issued. This guide covers who is in scope, how AFSI is built, how Form 4626 works, what each IRS notice changed and how the One Big Beautiful Bill Act (OBBBA) changed the rules for intangible drilling costs starting in 2026.
Congress added the CAMT to the Internal Revenue Code through the Inflation Reduction Act of 2022. The tax sits in section 55, the same section that once housed the old corporate AMT repealed by the Tax Cuts and Jobs Act. The two taxes share a section number and little else. The repealed tax started from taxable income. The current one starts from the net income a corporation reports on its applicable financial statement, usually audited GAAP statements, and then applies the adjustments listed in section 56A.
Under section 55(b)(2), the tentative minimum tax for an applicable corporation is 15 percent of AFSI, reduced by the corporate AMT foreign tax credit. The CAMT itself is the excess of that tentative minimum tax over the corporation's regular tax plus the tax imposed by section 59A. That second item is the base erosion minimum tax covered in our guide to the base erosion and anti-abuse tax for large multinational corporations.
Because the starting point is book income, CAMT ties tax results to financial reporting. The book-to-tax differences that a large filer already tracks on its Schedule M-3 book-tax reconciliation become the raw material for the AFSI calculation.
Only an "applicable corporation" can owe CAMT. Section 59(k) defines that term as any corporation, other than an S corporation, a regulated investment company or a real estate investment trust, that meets the average annual AFSI test for one or more prior tax years ending after December 31, 2021. Entity choice matters here, and our C corp guide for 2026 explains how C corporation status works more generally.
The average annual AFSI test has two versions:
| Corporation type | Test over the 3-tax-year period |
|---|---|
| Most corporations | Average annual AFSI exceeds $1 billion |
| Member of a foreign-parented multinational group (FPMG) | Group average annual AFSI exceeds $1 billion, and the corporation's own average annual AFSI is $100 million or more |
Two points about the test are easy to miss. First, the averaging uses AFSI computed without the financial statement net operating loss deduction in section 56A(d), so past book losses do not help a corporation stay under the threshold. Second, status is sticky. Once a corporation meets the test for any year, it is generally an applicable corporation for later years. Section 59(k)(1)(C) lets Treasury end that status after an ownership change or a run of consecutive years below the threshold, but only where Treasury determines continued treatment would not be appropriate.
The $100 million prong is what reaches the US subsidiaries of foreign groups. A US subsidiary with average annual AFSI of $100 million or more can be in scope if its foreign parent's worldwide group clears $1 billion, even though the subsidiary alone is far below that level. Those groups are often also working through the global minimum tax, which our Pillar Two compliance guide covers separately.
AFSI begins with net income or loss on the applicable financial statement and is then adjusted under section 56A(c). The adjustments with the largest dollar effect for most groups are:
The foreign tax credit side of the formula also has its own rules, separate from the regular foreign tax credit described in our foreign tax credit guide for 2026.
The OBBBA (Public Law 119-21, signed July 4, 2025) left the 15% rate and the $1 billion and $100 million thresholds in place. Its direct CAMT change is a new adjustment for intangible drilling and development costs (IDC).
Under amended section 56A(c)(13), AFSI is reduced by any deduction allowed for IDC under section 263(c), including amounts deducted under the section 59(e) election or section 291(b)(2), to the extent allowed in computing taxable income for the year. The matching book entry, depletion expense on the financial statement that relates to IDC, is disregarded. Section 70523(b) of the OBBBA makes this apply to tax years beginning after December 31, 2025, so calendar-year oil and gas producers see it for the first time on their 2026 returns.
The OBBBA's restoration of immediate expensing for domestic research costs under new section 174A did not change the CAMT statute itself. The IRS addressed the interaction in Notice 2026-7, covered below. For the regular-tax side of that change, see our explainer on how the One Big Beautiful Bill Act changed Section 174.
Treasury and the IRS have issued CAMT guidance in layers. The main pieces are:
On final regulations, Notice 2026-7 states that before any final CAMT regulations are published, Treasury and the IRS intend to issue new proposed regulations with rules similar to the interim notices. As of October 2026, that means taxpayers are still choosing which proposed rules and notices to rely on, each with its own reliance conditions. Through late October 2026, the IRS listed no CAMT development on its About Form 4626 page after the February 2026 instruction update, and no new CAMT proposed or final regulations had been published in the Federal Register.
CAMT is reported on Form 4626, Alternative Minimum Tax for Corporations. Part I determines whether the corporation is an applicable corporation. Part II computes the CAMT for corporations that are. The Form 4626 instructions say that, unless a filing exclusion applies, a corporation must file the form to determine whether it is an applicable corporation.
Two shortcuts can remove the filing requirement for corporations that have never been applicable corporations:
| Method | Source | General test | FPMG US test |
|---|---|---|---|
| Interim simplified method | Notice 2025-27 | $800 million | $80 million |
| Simplified method | 2024 proposed regulations | $500 million | $50 million |
Under the interim simplified method in Notice 2025-27, a corporation runs the section 59(k) test with the lower thresholds and a narrower set of AFSI adjustments. A corporation that falls below those thresholds and chooses the method does not file Form 4626 for that year. The exclusion does not apply to a corporation that was an applicable corporation in a prior tax year. Because $800 million is a higher cutoff than $500 million, more mid-sized groups fall under the newer method and avoid the full calculation.
Corporations that pay CAMT also need Form 8827 in later years, since CAMT paid creates a minimum tax credit. Under section 53, that credit can offset regular tax in a future year to the extent regular tax exceeds the tentative minimum tax for that year.
Assume a calendar-year domestic oil and gas corporation with no foreign operations and no base erosion tax. All figures are hypothetical.
Step 1: the applicable corporation test for 2026. The test looks at prior years. AFSI (before any book NOL deduction) was $1.05 billion in 2023, $1.20 billion in 2024 and $1.35 billion in 2025. The average is $1.2 billion, which exceeds $1 billion, so the corporation is an applicable corporation for 2026.
Step 2: 2026 AFSI.
| Item | Amount |
|---|---|
| Net income on the 2026 financial statements, after removing income tax expense | $1,500,000,000 |
| Add back book depreciation on section 168 property | +$200,000,000 |
| Subtract tax depreciation | -$350,000,000 |
| Add back book depletion attributable to IDC (new for 2026) | +$120,000,000 |
| Subtract IDC deducted under section 263(c) (new for 2026) | -$300,000,000 |
| 2026 AFSI | $1,170,000,000 |
Step 3: tentative minimum tax. 15% of $1.17 billion is $175.5 million. With no CAMT foreign tax credit, the tentative minimum tax is $175.5 million.
Step 4: compare with regular tax. Taxable income is $600 million, so regular tax at the 21 percent rate in section 11(b) is $126 million. CAMT is $175.5 million less $126 million, or $49.5 million. Total federal income tax is $175.5 million, which equals 15% of AFSI.
Step 5: the OBBBA effect. Without the two IDC lines, AFSI would be $1.35 billion, the tentative minimum tax $202.5 million and CAMT $76.5 million. The IDC adjustment lowers 2026 CAMT by $27 million, which is 15% of the $180 million net IDC adjustment.
Step 6: the credit. The $49.5 million of CAMT becomes a minimum tax credit carried to later years, usable when regular tax exceeds the tentative minimum tax.
Applicable corporations generally must include CAMT in their quarterly estimated tax payments. Notice 2025-27 waived the section 6655 addition to tax for CAMT liability only for tax years beginning after December 31, 2024 and before January 1, 2026, and only if the corporation files Form 2220 as the notice directs. That waiver does not cover tax years beginning in 2026, so 2026 installments should account for CAMT unless the IRS issues new relief. The Form 1120 due dates guide covers the return and extension calendar that Form 4626 rides along with.
CAMT also has to be reflected in the income tax provision on the financial statements. Our plain-English guide to ASC 740 explains the provision mechanics that CAMT feeds into.
What is the corporate alternative minimum tax rate? The rate is 15 percent of adjusted financial statement income, reduced by the CAMT foreign tax credit. A corporation pays CAMT only to the extent that amount exceeds its regular tax plus any section 59A base erosion tax.
Which corporations are subject to CAMT? Corporations whose average annual AFSI over a three-tax-year period exceeds $1 billion. For a US member of a foreign-parented multinational group, the group must exceed $1 billion and the US corporation's own average annual AFSI must be $100 million or more. S corporations, RICs and REITs are excluded.
Does every corporation have to file Form 4626? No. A corporation that has never been an applicable corporation and falls below the thresholds under the interim simplified method ($800 million and $80 million) or the simplified method in the proposed regulations ($500 million and $50 million) can choose that method and skip the form. S corporations, RICs and REITs do not file it.
How did the One Big Beautiful Bill Act change CAMT? For tax years beginning after December 31, 2025, AFSI is reduced by intangible drilling and development costs deducted under section 263(c), and book depletion related to those costs is disregarded. The rate and thresholds did not change.
Are there final CAMT regulations? As of October 2026, no. Treasury and the IRS have said in Notice 2026-7 that they intend to issue new proposed regulations, building on the 2025 and 2026 notices, before any final rules.
Madras Accountancy supports US CPA firms with tax preparation and accounting work for corporate clients, including book-to-tax workpapers, Form 1120 preparation and the supporting schedules that large-corporation returns require. To talk through how that support could fit your firm's CAMT review process, contact our team.
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The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
