IRS Form 4626: Who Files, CAMT Calculation, and Credits

IRS Form 4626 is the form a large corporation attaches to its income tax return to figure the Corporate Alternative Minimum Tax (CAMT), a 15% minimum tax on the adjusted book income of corporations whose three-year average income exceeds $1 billion. The CAMT was created by the Inflation Reduction Act of 2022.¹ Most corporations never touch it. S corporations, regulated investment companies, and real estate investment trusts are carved out entirely, and everyone below the income threshold is left alone.

Who Has to File

A corporation files Form 4626 if it is an “applicable corporation” under Internal Revenue Code Section 59(k). The core test looks at the corporation’s average annual Adjusted Financial Statement Income (AFSI) over the three tax years ending before the current year. If that average exceeds $1 billion, the corporation is in.²

Corporations in a foreign-parented multinational group face a two-part test. The full group must first clear the $1 billion average, and then the U.S. members of that group must have their own three-year average AFSI of at least $100 million. Both prongs have to hit before the U.S. subgroup owes CAMT.²

A corporation that has existed for fewer than three tax years applies the test using whatever shorter period it has. And the designation is sticky. Once a corporation qualifies as an applicable corporation, it stays one. Losing the status requires a change in ownership or a run of years failing the income test, plus an affirmative determination by the Treasury Secretary that continued treatment is no longer appropriate. The statute leaves the number of failing years to the Secretary based on facts and circumstances.³

Corporations That Never File

Some entities are outside the CAMT no matter how large their book income:

S corporations
Regulated investment companies (RICs)
Real estate investment trusts (REITs)
Tax-exempt organizations with no unrelated business taxable income and no requirement to file an exempt organization business income tax return

S corporations, RICs, and REITs are excluded from the Section 59(k)(1) definition of “applicable corporation,” so they cannot trigger CAMT.²

The Simplified Method for Screening

Running the full AFSI calculation just to prove you owe nothing is expensive, so the IRS offers an optional simplified method. Under Notice 2025-27, the general AFSI screening threshold drops from $1 billion to $800 million, and the foreign-parented U.S. subgroup threshold drops from $100 million to $80 million.⁴

The method works as a screen. A corporation whose AFSI falls below these reduced thresholds can conclude it is not an applicable corporation without performing the full set of AFSI adjustments, and the method limits which adjustments have to be run at all. A corporation that clears the simplified test and was not already an applicable corporation from a prior year does not file Form 4626.⁵

How the Tax Is Calculated

AFSI starts with the net income or loss on the corporation’s Applicable Financial Statement, typically the audited financial statement filed with the SEC or provided to shareholders.⁶ That figure then goes through a set of statutory adjustments, and the 15% rate is applied to the result.

Three adjustments do most of the heavy lifting. Book depreciation is replaced with the depreciation deductions allowed under the regular tax code, so accelerated methods and bonus depreciation flow through to AFSI. For capital-intensive corporations, this single adjustment can shift AFSI by hundreds of millions of dollars. A corporation holding partnership interests cannot use the partnership’s book net income; it must calculate its distributive share of the partnership’s own AFSI, as if the partnership were running through the same process. And federal and foreign income taxes shown as expenses on the financial statements are added back, because the minimum tax is meant to measure pre-tax income.⁶

Once AFSI is set, the computation itself is short. Multiply AFSI by 15% to get the Tentative Minimum Tax (TMT). Reduce the TMT by the Corporate AMT Foreign Tax Credit, which prevents double taxation on income already taxed abroad. Then compare that reduced TMT to the corporation’s regular federal income tax plus any Base Erosion and Anti-Abuse Tax (BEAT). The CAMT owed is the amount by which the TMT exceeds the combined regular-plus-BEAT liability. If the regular tax bill is already higher, CAMT is zero. A corporation that is not an applicable corporation has a TMT of zero by statute.⁷

Credit for CAMT Paid in Prior Years

Paying CAMT is not a permanent loss. Under Section 53, a corporation that pays CAMT generates a minimum tax credit against its regular tax liability in future years. The credit equals the total net CAMT paid in all prior years beginning after 2022, minus amounts already used.⁸

Use is capped. In any single year, the credit cannot exceed the amount by which the corporation’s regular tax liability (after other credits) exceeds its tentative minimum tax for that year. That means the credit tends to become useful in years when regular tax liability rises above the CAMT floor, typically when the corporation has fewer deductions or higher taxable income than in the year the CAMT was triggered. Unused credit carries forward indefinitely.⁸

Filing, Payment, and Estimated Taxes

Form 4626 is not filed on its own. It attaches to the corporation’s annual income tax return, usually Form 1120. The deadline is the 15th day of the fourth month after the tax year ends, and an automatic six-month extension of the income tax return extends Form 4626 with it.⁵

An extension to file is not an extension to pay. Any CAMT liability is due by the original return date. CAMT also has to be built into quarterly estimated tax payments. Underpayment triggers an addition to tax under Section 6655, calculated using the underpayment rate on the shortfall for the period of underpayment.⁹

The IRS has provided some transition relief. For the 2023 tax year, it waived estimated tax penalties attributable to CAMT liability.¹⁰ Later notices, including Notice 2025-27, have continued to address penalty relief, though the scope has narrowed as the CAMT matures.¹¹ Confirm the current year’s relief before setting an estimated payment schedule.

Records to Keep

Hold onto the financial statements, workpapers, and calculations behind AFSI and the tax figure. The general IRS retention rule is that records supporting a return should be kept until the statute of limitations expires, typically three years from the filing date, extended to six years if the corporation underreports gross income by more than 25%.¹² Partnership adjustments in particular pull in data from other entities, and reconstructing them years later is far harder than filing them cleanly in the first place.

1
Internal Revenue Service. Corporate Alternative Minimum Tax
2
Legal Information Institute. 26 USC 59(k)(1) – Applicable Corporation Defined
3
Office of the Law Revision Counsel. 26 US Code 59 – Other Definitions and Special Rules
4
Internal Revenue Service. New Simplified Method for Determining Status for Corporate Alternative Minimum Tax
5
Internal Revenue Service. Instructions for Form 4626
6
Office of the Law Revision Counsel. 26 US Code 56A – Adjusted Financial Statement Income
7
Office of the Law Revision Counsel. 26 USC 55 – Alternative Minimum Tax Imposed
8
Office of the Law Revision Counsel. 26 US Code 53 – Credit for Prior Year Minimum Tax Liability
9
Office of the Law Revision Counsel. 26 US Code 6655 – Failure by Corporation To Pay Estimated Income Tax
10
Internal Revenue Service. Relief From Additions to Tax for Underpayments Applicable to the New Corporate Alternative Minimum Tax
11
Internal Revenue Service. Notice 2025-27
12
Internal Revenue Service. How Long Should I Keep Records?