What Is the AMT Special Depreciation Allowance?

The AMT special depreciation allowance — commonly called bonus depreciation — is fully deductible for Alternative Minimum Tax purposes, which means claiming it creates no AMT adjustment. The IRS treats the special depreciation allowance the same under both the regular tax and the AMT, and because the depreciable basis is identical under both systems after the allowance is claimed, no further adjustment is required on the remaining basis either.¹ For most business property placed in service in 2026, the AMT depreciation adjustment that used to accompany accelerated cost recovery simply does not apply.

Why Bonus Depreciation Creates No AMT Adjustment

The Alternative Minimum Tax is a parallel calculation that starts with regular taxable income and adds back deductions the code treats as preferential. You compute tax under both systems and pay the higher amount.² Depreciation was historically one of the largest add-backs, because the Modified Accelerated Cost Recovery System (MACRS) front-loads deductions while the AMT required a slower method.

The special depreciation allowance sits outside that mechanism. It is deductible in full for AMT, so when you write off 100% of an asset’s cost in the year of purchase, nothing remains to recalculate. Even the portion of the asset’s basis that would ordinarily be depreciated over subsequent years — the “remaining basis” — carries the same figure under both systems, so ordinary MACRS deductions taken against it produce no gap.¹

Qualified property for the allowance includes tangible assets with a MACRS recovery period of 20 years or less, computer software, water utility property, and certain film, television, theatrical, and sound recording productions. Both new and used property can qualify.³ The deduction is reported on Form 4562.⁴

The 2025 Law That Locked This In

The One Big Beautiful Bill Act, signed on July 4, 2025, permanently restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025.⁵ Before that law, the Tax Cuts and Jobs Act had begun phasing bonus depreciation down from 100% starting in 2023, on a track that would have reached 0% by 2027. The phase-down would have left a partial regular MACRS deduction on the non-bonus portion of each asset, potentially reopening the door to AMT adjustments. Permanent restoration closed that window.

There is an additional layer of protection worth knowing about. IRS guidance states that no AMT depreciation adjustment is required for property placed in service after 2015, even when the taxpayer elected out of bonus depreciation.¹ So for almost any tangible business asset acquired in recent years, the AMT depreciation adjustment is off the table regardless of the election choices made.

When the Adjustment Can Still Apply

The AMT depreciation adjustment has not been repealed. It survives in a few narrow situations, most involving older assets:

Legacy assets placed in service before 2016 where the taxpayer elected out of any available bonus depreciation. The parallel AMT depreciation schedule continues for the remaining life of the asset.
Property placed in service between 1987 and 1998, which uses the Alternative Depreciation System for AMT — straight-line over the asset’s class life. Most of this property is fully depreciated by now, but long-lived assets like nonresidential real property placed in service in the 1990s can still generate small adjustments.
Property that does not qualify for the special depreciation allowance. Listed property that falls at or below 50% business use, for example, cannot claim bonus depreciation and may be subject to ADS. The post-2015 rule still limits the practical AMT effect.

For a business buying equipment, machinery, furniture, or vehicles today, the adjustment is essentially a non-issue. It lives on mainly as a concern for taxpayers still carrying older assets on their depreciation schedules.

How to Calculate the Adjustment When It Applies

When you do have an affected asset, you keep two depreciation schedules and subtract the AMT amount from the regular tax amount for the year. A positive result increases your Alternative Minimum Taxable Income; a negative result decreases it. The figure is reported on Line 2l of Form 6251.¹

The AMT depreciation method depends on when the asset was placed in service. For property placed in service before 1999, AMT depreciation follows the Alternative Depreciation System: straight-line over the asset’s class life, which is generally longer than the MACRS recovery period.⁶ For property placed in service from 1999 through 2015 that is not covered by bonus depreciation, AMT uses the 150% declining balance method (switching to straight-line when that produces a larger deduction), applied over the same recovery period used for the regular tax.⁷ Real property (Section 1250) uses straight-line under both systems, so no adjustment arises for it.

Dual Basis and the Reversal Effect

When the two systems claim different amounts each year, the asset carries two adjusted bases: a regular tax basis and a higher AMT basis in the early years, because less cumulative depreciation has been taken for AMT. That gap narrows over time.

The adjustment is a timing difference, not a permanent one. Early-year add-backs increase AMTI and may trigger AMT liability. In later years the pattern flips: the AMT deduction exceeds the regular tax deduction, producing negative adjustments that reduce AMTI and reverse the earlier add-backs. Total depreciation over the asset’s life is identical under both systems.

The dual basis also matters on disposition. If you sell an asset before it is fully depreciated, your gain or loss can differ between the two systems because the remaining basis differs. A sale that produces a gain for regular tax might produce a smaller gain, or even a loss, for AMT.

The Minimum Tax Credit

Because the depreciation adjustment is a timing item — what the IRS calls a deferral item rather than an exclusion item — any AMT you pay because of it generates a minimum tax credit that can offset your regular tax in later years, when your regular tax liability exceeds your tentative minimum tax. The credit is computed on Form 8801.⁸ The credit is only available for AMT attributable to deferral items; permanent differences like the state tax deduction do not generate it.

2026 AMT Exemptions

Even if a depreciation adjustment applies, you may owe no AMT because of the exemption. For 2026, the AMT exemption is $90,100 for single filers and $140,200 for married couples filing jointly, with phase-outs beginning at $500,000 of AMTI for single filers and $1,000,000 for joint filers.⁹ The AMT rate on the taxable excess is 26% up to $175,000 and 28% above that ($87,500 for married filing separately).² You owe AMT only to the extent the tentative minimum tax exceeds your regular tax.

A Note on Corporate AMT

Everything above concerns the individual AMT. The traditional corporate AMT that used the same depreciation-adjustment framework was repealed by the Tax Cuts and Jobs Act for tax years beginning after December 31, 2017.¹⁰ The Inflation Reduction Act of 2022 created a separate Corporate Alternative Minimum Tax that imposes a 15% minimum tax on adjusted financial statement income for corporations with average annual financial statement income above $1 billion.¹¹ Because that regime works from book income, the depreciation-adjustment mechanics described here do not apply to it.

1
Internal Revenue Service. Instructions for Form 6251
2
Office of the Law Revision Counsel. 26 USC 55 – Alternative Minimum Tax Imposed
3
Office of the Law Revision Counsel. 26 US Code 168 – Accelerated Cost Recovery System
4
Internal Revenue Service. About Form 4562, Depreciation and Amortization
5
Internal Revenue Service. One, Big, Beautiful Bill Provisions
6
Internal Revenue Service. Publication 946 – How To Depreciate Property
7
Office of the Law Revision Counsel. 26 USC 56 – Adjustments in Computing Alternative Minimum Taxable Income
8
Internal Revenue Service. Instructions for Form 8801
9
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
10
Internal Revenue Service. A Comparison for Large Businesses and International Taxpayers
11
Internal Revenue Service. Corporate Alternative Minimum Tax