What Is CAMT?
The Corporate Alternative Minimum Tax (CAMT) is a 15% minimum tax on large corporations’ “adjusted financial statement income” (AFSI), enacted under the Inflation Reduction Act (for tax years beginning after Dec 31, 2022). Applies to corporations with average financial statement income over $1 billion. (bakermckenzie.com)
Latest Guidance: Notice 2026-7
- Issued in Internal Revenue Bulletin No. 2026-11 on March 9, 2026. It provides interim guidance on how CAMT applies, pending final regulations. (irs.gov)
- Helps clarify the calculation of AFSI, adjustments for federal income tax credits, consolidated return group issues, and underpayment penalties. (bakermckenzie.com)
CAMT Key Considerations for Corporations
- Determine if you're an applicable corporation: average financial statement income exceeding $1B over a testing period. If yes, CAMT likely applies.
- AFSI calculation: includes income per financial statements, adjusting for certain items like credits, deductions, and items included or excluded under CAMT rules. Notice 2026-7 updates some methods. (irs.gov)
- Consolidated vs. stand-alone status: If you belong to a consolidated group, CAMT rules may treat your entity and group differently for liability. Guidance helps clarify this for 2025 returns.
- Avoiding penalties: Underpayment penalties related to CAMT are being addressed—certain exemptions or relief may apply if following interim guidance.
Action Plan for Corporations
- Review your audited financial statements—check revenue, expense recognition, and credits used, since they affect your AFSI.
- Work with accounting and tax teams to model CAMT liability under current interim guidance to estimate possible tax exposure.
- Monitor Treasury/IRS rulemaking: proposed regulations expected; Interim rules may be updated.
- Consider timing of recognizing income and credits to optimize CAMT impact.
Bottom line: CAMT is complex and evolving. Entities over the $1B threshold need purposefully assess their operations under current interim guidance and prepare for rules to firm up.