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AMT Sweet Spot

Informal term for the zone of alternative minimum tax (AMT) income after the AMT income exemption amount is fully phased out. Your AMT marginal rate then drops back to 28%, while your effective rate could have been as high as 35% when the exemption amount was phasing out. In the "sweet spot," your rate stays at 28% until your income gets high enough to put you back into the ordinary tax system, when you pay the top ordinary income tax rate of 37%.

For more on this concept in relation to ISO exercises, see an article elsewhere on this website.

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