Should You Do a Roth Conversion in an AMT Year? (w/Examples) + FAQs

This article reflects federal rules and California rules as of June 2026 and covers tax years 2025 and 2026. Tax law changes — confirm current figures before you file.

Quick Answer

It depends — sometimes yes, often no. For tax years 2025 and 2026, a Roth conversion in an AMT year can be a bargain if your conversion income is taxed at the flat 26% or 28% AMT rate instead of a higher regular bracket. But if the income pushes you into the exemption phase-out, your true rate can jump to 35%.

A Roth conversion moves money from a pre-tax traditional IRA into a tax-free Roth IRA, and you pay ordinary income tax on every dollar you move. The catch is that the converted amount lands in both your regular taxable income and your Alternative Minimum Taxable Income (AMTI), so it can quietly inflate the very number that decides whether the AMT bites and how hard.

The stakes are real, and the timing window is tight. The AMT is roaring back for high earners in 2026 — Wealthspire reports that a married couple’s exemption now fully phases out near $1.28 million of AMT income in 2026, versus roughly $1.8 million in 2025, so far more conversions will brush against AMT next year than this year.

Here is what you will learn:

🧮 How a Roth conversion changes your AMT math, dollar for dollar
⚠️ When converting inside AMT is a hidden discount versus a hidden penalty
📉 The 2026 OBBBA rule change that doubles the phase-out speed
🏛️ Whether your state — including California — piles on its own AMT
✅ The exact steps, forms, and deadlines to convert without a surprise bill

What the Alternative Minimum Tax Actually Is

The Alternative Minimum Tax is a second, parallel tax system. You figure your tax the normal way, then figure it again under AMT rules, and you pay whichever number is higher. It exists to stop high earners from using too many deductions and breaks to wipe out their tax bill.

AMT starts from your regular income, then adds back certain items the normal system let you subtract — most famously the bargain element on exercised incentive stock options (ISOs) and, in some years, state and local taxes. The result is your Alternative Minimum Taxable Income, or AMTI. You then subtract an exemption and apply a flat rate.

For tax year 2025, per the IRS figures, the AMT exemption is $88,100 for single filers and $137,000 for married filing jointly. The AMT rate is 26% on AMTI up to $239,100 (for 2025) and 28% on AMTI above that, for all filers except married filing separately.

The consequence of ignoring AMT is a nasty April surprise: you run your regular return, see a comfortable number, then discover the AMT calculation produces a larger bill you never planned for. The fix is simple in concept — run both calculations before you act — but most DIY filers skip it because tax software hides it until the return is nearly done.

How the Exemption Phase-Out Works

The exemption is not guaranteed. Once your AMTI climbs past a threshold, the exemption shrinks, and that shrinkage is what makes high-income conversions dangerous.

For tax year 2025, the phase-out begins at $626,350 of AMTI for single filers and $1,252,700 for married filing jointly. Above those points, you lose 25 cents of exemption for every extra dollar of AMTI in 2025.

That 25-cent loss is the trap. While your exemption is melting away, each new dollar of income is effectively taxed twice — once at the 28% AMT rate and again through the lost exemption — pushing your real marginal rate to about 35%. A Roth conversion dumped into this zone costs far more than the headline 28% suggests, so always check where the conversion lands before you pull the trigger.

The 2026 OBBBA Change That Reshapes This Decision

The One Big Beautiful Bill Act (OBBBA) rewrote the AMT phase-out rules starting in tax year 2026, and the change is bad news for high earners weighing a conversion. It is permanent, not a temporary tweak, so this is the new normal — not a one-year blip.

Two things changed at once for 2026. First, the phase-out thresholds drop to $500,000 for single filers and $1,000,000 for married filing jointly, down from the much higher 2025 levels. Second, the phase-out rate doubles from 25 cents to 50 cents of lost exemption per dollar of AMTI over the threshold.

The exemption amounts themselves rose slightly. IRS 2026 adjustments set the 2026 exemption at $90,100 for singles and $140,200 for joint filers, with full phase-out ranges of $500,000–$680,200 (single) and $1,000,000–$1,280,400 (joint).

The consequence is steep. Because the exemption now vanishes twice as fast, a high-earner’s true marginal rate inside the 2026 phase-out zone can climb toward 35% on conversion dollars — and it kicks in at a lower income than before. The misconception that “AMT only hits ISO people” is now dangerously outdated; in 2026, high salary plus a large conversion alone can drag you in. What to do: if you are near these new thresholds, model the conversion under 2026 rules specifically, not last year’s.

The Core Insight: Conversion Income Hits AMTI Too

Here is the idea that decides everything. The dollars you convert are ordinary income, so they raise your regular taxable income and your AMTI by the same amount. There is no AMT add-back for a conversion — it simply stacks on top of whatever AMTI you already have.

That single fact cuts both ways. If your AMTI sits comfortably below the phase-out threshold, conversion income may be taxed at the flat 26% or 28% AMT rate — which can be lower than your regular marginal bracket of 32%, 35%, or 37%. In that narrow window, an AMT year is a quiet conversion discount.

But if the conversion pushes your AMTI into the phase-out range, you destroy exemption as you go, and the effective cost jumps. The same conversion that looked like a 28% bargain becomes a 35% mistake. The deciding factor is where on the AMTI ladder your conversion dollars land — not whether you are “in AMT” at all.

A common misconception is that being in AMT automatically makes conversions cheaper because of the “low” 28% rate. That is only true below the phase-out. Once you are losing exemption, the math flips hard, so never assume — calculate the marginal rate on the last dollar converted.

Which Situation Applies to You?

The right answer depends entirely on your numbers and your filing status. Find the branch that fits you, then read its example below.

You exercised ISOs this year: Your AMTI is already inflated by the ISO bargain element. Adding conversion income can push you into the phase-out fast — usually a reason to convert less, or wait.
You are a high W-2 earner near the threshold: A conversion that crosses $500,000 (single, 2026) or $1,000,000 (joint, 2026) of AMTI triggers the 50-cent phase-out. Convert only up to the threshold.
You are a retiree in a temporary low-income year: AMT rarely binds here. This is often the best time to convert, AMT or not, because your regular rate is low.
You file married filing separately: Your AMT exemption and brackets are roughly half, so AMT bites sooner — model carefully.
You live in an AMT state (like California): Add a state AMT layer on top of the federal result before deciding.

Worked Example: Convert Inside the 28% Window (the Good Case)

This is the math IRS.gov will not hand you. Let us walk it step by step for a married couple in tax year 2025.

The setup. Dave and Maria are married filing jointly. Their regular taxable income is $300,000, which puts their top regular bracket at 24%. They have $200,000 they want to convert from a traditional IRA.

Step 1 — Regular tax on the conversion. Stacking $200,000 on top of $300,000 pushes them through the 24%, 32%, and into the 35% regular brackets for 2025. Their blended regular rate on the converted slice lands near 30%.

Step 2 — Check AMTI. Their AMTI is roughly $500,000 after the conversion — well below the 2025 joint phase-out start of $1,252,700, so their full $137,000 exemption survives.

Step 3 — AMT rate on the conversion. Inside AMT, those conversion dollars face the flat 26%/28% AMT rates, not 35%. Because their AMTI is under the phase-out, the conversion is taxed more cheaply under AMT than under the regular system.

Step 4 — The takeaway. Dave and Maria pay whichever total is higher, but because AMT caps their conversion dollars near 28% instead of 35%, the AMT year hands them a real discount. Convert the full $200,000.

Conversion Detail (2025)	Result
Amount converted	$200,000
AMTI after conversion	~$500,000 (under $1,252,700 phase-out)
Marginal regular rate on slice	~35%
Effective AMT rate on slice	~28%
Verdict	Convert — AMT is the cheaper path

Worked Example: Convert Into the Phase-Out (the Bad Case)

Now flip the numbers to show the trap, again for tax year 2026 to use the new rules.

The setup. Priya is single. Her AMTI before any conversion is already $480,000 from a high salary plus a modest ISO exercise. She wants to convert $100,000 in 2026.

Step 1 — Find the threshold. For 2026, the single phase-out begins at $500,000 of AMTI. Priya’s first $20,000 of conversion gets her to the line; the next $80,000 sits inside the phase-out.

Step 2 — Apply the 50-cent rule. For every dollar above $500,000, Priya loses 50 cents of exemption in 2026. On $80,000 of conversion past the threshold, she loses $40,000 of her $90,100 exemption.

Step 3 — Effective rate on the bad slice. That lost exemption is extra taxable AMTI. Combined with the 28% AMT rate, her effective rate on the $80,000 inside the phase-out climbs to roughly 35%.

Step 4 — The takeaway. Priya should convert only about $20,000 in 2026 — up to the $500,000 threshold — and stop. The rest is overpriced. Spread the remaining $80,000 across future lower-income years.

Conversion Detail (2026)	Result
AMTI before conversion	$480,000
Single phase-out start	$500,000
Cheap conversion room	~$20,000
Effective rate on dollars past $500,000	~35%
Verdict	Convert only to the threshold, then stop

Worked Example: The Retiree Sweet Spot

The third common case is the retiree in a low-income gap year — between leaving work and starting Social Security or required minimum distributions.

The setup. George, single, retired at 63 in 2025. His only income is $30,000 from a part-time job. He has a large traditional IRA and wants to convert.

Step 1 — AMT is a non-issue. At $30,000 of income, George is nowhere near the $626,350 (2025 single) AMT phase-out, and he likely owes no AMT at all. His regular rate is what matters.

Step 2 — Fill the low brackets. George can convert roughly $100,000 and still keep most of it in the 12% and 22% regular brackets for 2025 — far below his future RMD-era rate.

Step 3 — The takeaway. This is the textbook best time to convert, and AMT does not change that. George should convert aggressively each year until age 73, when RMDs begin. Convert up to the top of the 22% or 24% bracket annually.

NIIT, IRMAA, and Social Security — the Stealth Costs

AMT is not the only thing a conversion touches. Three other “stealth” consequences can erase the benefit if you ignore them.

The Net Investment Income Tax (NIIT) is a 3.8% surtax on investment income for higher earners. A conversion is not investment income itself, but by raising your modified AGI, it can push your other dividends and capital gains into NIIT range — a real cost that hides outside the AMT calculation entirely.

IRMAA is the Medicare premium surcharge. A big conversion raises your MAGI, and that MAGI determines your Medicare Part B and Part D premiums two years later. A 2026 conversion can spike a retiree’s 2028 Medicare premiums by thousands, so retirees on Medicare must model this lag before converting.

Conversion income can also make more of your Social Security benefits taxable, since the formula counts the extra income. The consequence is a “tax torpedo” where each conversion dollar costs more than its face rate. What to do: run a full MAGI projection, not just an AMT check, before any large conversion.

State AMT: Does California Pile On?

Federal AMT is only half the picture in a handful of states. Most states have no AMT, but a few — including California, Colorado, Connecticut, Iowa, and Minnesota — run their own version.

California is the heavyweight. It imposes a state AMT at a 7% rate (per California’s Franchise Tax Board rules), with its own exemption and phase-out, reported on California Schedule P. A Roth conversion is fully taxable for California purposes too, so a conversion that triggers federal AMT can trigger California AMT as well.

The consequence is a stacked bill: federal AMT plus a separate California AMT on the same conversion. The misconception that “my state just copies the federal number” is false in California — the state runs its own parallel math. What to do: if you live in an AMT state, ask your preparer to run the state AMT form alongside the federal Form 6251 before you convert. If you live in a no-income-tax state like Texas, Florida, or Washington, there is no state AMT layer at all — the answer there is simply “your state does not tax this,” and that is complete.

The Forms: 6251 and 8606

Two federal forms govern this whole transaction, and getting them right is how you avoid an IRS notice.

Form 6251 is the Alternative Minimum Tax form. It walks you from regular taxable income through the add-backs, the exemption, the phase-out, and the final AMT figure. You file it with your Form 1040 if AMT applies. If you skip it when AMT is owed, the IRS recalculates and sends a bill plus interest — so run it even when you think you are clear.

Form 8606 reports the Roth conversion itself. The taxable amount of the conversion flows from here to your 1040 and into your AMTI. The deadline for both forms is your return’s due date — April 15, 2026, for tax year 2025, or October 15 with an extension. (For step-by-step help, see our companion guides on How to Fill Out Form 8606 and How to Fill Out Form 6251.)

A critical timing rule: the Roth conversion itself must happen by December 31 of the tax year. Unlike IRA contributions, you cannot convert “for 2025” in early 2026 — the calendar-year deadline is hard, and missing it pushes the income into the next year.

Deadlines, Costs, and Timing

The conversion must be completed by December 31 of the year you want it taxed. There is no grace period, so a December conversion is the last call for that tax year.

Cost varies by approach. A DIY conversion through your custodian is free to execute, but you bear the risk of mis-modeling AMT. A one-time projection from a CPA or fee-only advisor typically runs a few hundred dollars and often pays for itself by sizing the conversion correctly. For a multi-year conversion plan inside an AMT or ISO situation, professional modeling is worth it — the cost of one mis-sized conversion usually dwarfs the fee.

There is no recharacterization escape hatch. Since 2018, you cannot undo a Roth conversion. Once done, it is permanent, which is exactly why getting the AMT math right before converting matters so much.

Mistakes to Avoid

Converting without running Form 6251 first. You may owe AMT you never saw coming, plus interest on the underpayment.
Assuming AMT always makes conversions cheaper. Below the phase-out it can; inside it, your rate jumps toward 35%.
Converting past the phase-out threshold. Each dollar over the line destroys exemption and is badly overpriced.
Using 2025 thresholds for a 2026 conversion. The 2026 thresholds are lower and phase out twice as fast — old numbers will mislead you.
Ignoring NIIT, IRMAA, and Social Security. A conversion can spike all three, costs that hide outside the AMT box.
Forgetting the December 31 deadline. Miss it and the income lands in the wrong year, wrecking your bracket plan.
Skipping state AMT. In California, Colorado, Connecticut, Iowa, or Minnesota, you may owe a second AMT bill.
Converting a lump sum instead of laddering. Spreading conversions across years often keeps every dollar in a lower rate.

Do’s and Don’ts

Do model both regular and AMT tax before converting — because you pay the higher of the two, and only modeling reveals which.
Do convert up to the phase-out threshold and stop — because dollars below it are cheap and dollars above it are not.
Do use low-income gap years aggressively — because a retiree’s low bracket beats any future RMD-era rate.
Do project two years ahead for IRMAA — because Medicare premiums follow your MAGI on a two-year delay.
Do check your state’s AMT form — because California and a few others run a separate parallel tax.
Don’t assume the 28% AMT rate is a discount — because the phase-out can push your real rate to 35%.
Don’t convert in a high-ISO year without modeling — because the ISO add-back already inflates your AMTI.
Don’t wait until December to start planning — because you need months to size the conversion, not days.
Don’t expect to undo it — because recharacterization of conversions has been banned since 2018.
Don’t rely on default tax software settings — because AMT is hidden until late and easy to overlook.

Pros and Cons

Pro — Possible flat-rate discount. Below the phase-out, conversion dollars can be taxed at 26–28% instead of a higher regular bracket.
Pro — Permanent tax-free growth. Money in the Roth grows and withdraws tax-free, locking in today’s rate.
Pro — No future RMDs. Roth IRAs have no required minimum distributions for the owner, easing later-life tax pressure.
Pro — Estate benefit. Heirs inherit Roth dollars tax-free, a clean legacy asset.
Pro — Uses up low brackets. A gap-year conversion fills cheap brackets that would otherwise be wasted.
Con — Can trigger or worsen AMT. Conversion income stacks onto AMTI and may drag you into the phase-out.
Con — Stealth surcharges. It can raise NIIT, IRMAA, and the taxable share of Social Security.
Con — Irreversible. You cannot undo a conversion if your income changes later in the year.
Con — State AMT. California and a few states add a separate tax layer.
Con — Cash flow hit. You owe the tax now, ideally paid from outside funds, not the IRA itself.

What to Do Next

Pull your year-to-date income and any ISO exercises so you know your starting AMTI before you add a single conversion dollar.
Run a Form 6251 projection under the correct year’s rules — 2025 or 2026 — to find where your phase-out threshold sits.
Size the conversion to the threshold, converting up to but not past the point where the exemption starts melting.
Check NIIT, IRMAA, and state AMT so no stealth cost ambushes you later.
Execute by December 31, fund the tax from non-IRA cash, and report it on Form 8606 and Form 6251 by the April deadline.
Call a CPA or tax attorney if you have ISOs, are inside the phase-out, or live in an AMT state — the modeling fee is small next to a mis-sized conversion.

This article is educational and is not a substitute for advice from a licensed tax professional for your specific situation. A conversion that involves ISOs, the AMT phase-out, or a state AMT is complex enough to warrant a CPA or tax attorney who can model your exact numbers.

FAQs

Does a Roth conversion count as income for AMT? Yes. A conversion is fully taxable ordinary income, so it raises both your regular taxable income and your AMTI dollar for dollar. There is no AMT add-back — it simply stacks on top.

Can a Roth conversion trigger the AMT? Yes. By inflating your AMTI, a large conversion can push you past the exemption phase-out threshold and create or increase an AMT bill, especially under the lower 2026 thresholds.

Is a Roth conversion cheaper in an AMT year? Sometimes. Below the phase-out, conversion dollars may face the flat 26–28% AMT rate instead of a higher regular bracket. Inside the phase-out, the effective rate can jump toward 35%.

What is the 2025 AMT exemption? $88,100 for single filers and $137,000 for married filing jointly in tax year 2025, phasing out above $626,350 (single) and $1,252,700 (joint).

What changed for AMT in 2026? The phase-out got harsher. For 2026, thresholds drop to $500,000 (single) and $1,000,000 (joint), and the phase-out rate doubles from 25 to 50 cents per dollar of AMTI over the line.

How much can I convert without triggering AMT? Up to your phase-out threshold. Convert only enough to keep your AMTI below $500,000 (single, 2026) or $1,000,000 (joint, 2026) to avoid losing exemption at the fast 50% rate.

Can I undo a Roth conversion if it triggers AMT? No. Recharacterization of conversions has been banned since 2018. Once you convert, it is permanent, which is why modeling AMT beforehand is essential.

Does California have its own AMT on conversions? Yes. California imposes a 7% state AMT, reported on Schedule P, and a conversion is taxable for California too — so you can owe both federal and state AMT on the same conversion.

Does a Roth conversion raise my Medicare premiums? Yes. A conversion raises your MAGI, and IRMAA uses your MAGI from two years earlier, so a 2026 conversion can increase your 2028 Medicare Part B and Part D premiums.

What is the deadline to do a Roth conversion? December 31 of the tax year. Unlike IRA contributions, conversions cannot be done in the following year — the calendar-year deadline is firm.

Which form reports a Roth conversion? Form 8606. The taxable conversion amount flows from Form 8606 to your 1040 and into your AMTI calculation on Form 6251, both due by your return’s deadline.

Is it better to convert in a low-income retirement year instead? Often, yes. A gap year before RMDs usually keeps conversion dollars in low regular brackets and far below any AMT phase-out, making it the cheapest time to convert.

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