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Alternative minimum tax (AMT) you pay isn’t gone. It turns into a carryover you can use against federal tax for the next 7 years, but only in years when your regular federal tax is higher than that year’s AMT. You claim it on line 40427 with Form T691. Provincial minimum tax runs separately.
Most people never see the AMT. The ones who do usually had one very large year: a cottage sold, a business wound up, a big option exercise. Our alternative minimum tax explainer covers how the tax is built, so this page deals with what happens after you’ve paid it.
Who still pays alternative minimum tax in 2026?
People with a high adjusted income in a single year, usually from a large capital gain. The CRA’s 2025 Form T691 charges 20.5% on adjusted taxable income above a basic exemption of $177,882. For 2026 the exemption follows the start of the fourth federal bracket, which the CRA lists at $181,440. The 2026 form isn’t out yet, so check it when it is. This is current as of October 2026.
The CRA’s line 41700 page says you may need to file the form if your income is over the exemption and you had taxable capital gains, certain rental or tax shelter losses, or claims such as union dues, child care and moving expenses. If none of that fits you, skip it.
The AMT calculation is tougher than your normal one. It counts 100% of most capital gains, where regular tax counts 50%. It also allows only 50% of most non-refundable credits and 80% of the donation credit. A big gain can trigger it with no tax shelters anywhere in sight. In the top bracket the regular federal rate on a gain is 16.5% (33% on the taxable half), which is below the AMT’s 20.5% on the whole gain.
How does the 7-year carryforward work?
Any AMT you pay above your regular tax becomes a carryover, and you can apply it against federal tax in the following 7 years. On the 2025 form the carryover from previous years covers 2018 to 2024, and any unapplied 2018 amount drops out of the total available for 2026. AMT paid for 2026 should stay usable through 2033.
Each year you can claim the smaller of two amounts: what’s left of your carryover, or your regular federal tax payable minus that year’s AMT figure. A low-tax year recovers little. A year when you owe AMT again recovers little or nothing. Fill in Parts 1, 2 and 8 of the T691, enter the claim on line 40427, and attach the form to a paper return. The form says to do this even in a year when you owe no minimum tax.
What does a recovery look like in dollars?
Take an Ontario employee who earns $60,000 and sells a cottage in 2026 for a $600,000 capital gain. I ran it through the site’s estimate engine, which uses the basic personal amount plus CPP and EI credits, no other deductions, and federal tax only.
| 2026 return | Amount |
|---|---|
| Regular federal tax | $89,775 |
| Federal AMT after the credit cuts | $96,582 |
| Extra paid, which becomes the carryover | $6,807 |
With the same salary, a $400,000 gain produced no AMT in the estimate. At $450,000 it kicked in, at about $807. Now the recovery. The table uses 2026 rates as a stand-in for later years, because 2027 federal brackets aren’t published yet.
| Year | Salary | Regular federal tax | Carryover used | Carryover left |
|---|---|---|---|---|
| Year 2 | $50,000 | $3,985 | $3,985 | $2,822 |
| Year 3 | $70,000 | $7,278 | $2,822 | $0 |
All $6,807 comes back within two years, as a smaller federal bill each time. In year 3 the person pays $4,456 instead of $7,278. No cheque arrives for the carryover, and nothing is added for the time the money was out of your hands. On a $6,807 payment that waiting has a real cost, even though the recovery itself is certain.
What can slow the recovery down?
- A stretch of low income. At a $40,000 salary the estimate shows regular federal tax of only $2,691, so getting back $6,807 would take three years.
- Another AMT year, which uses up the room and adds a new carryover to the pile.
- The seven-year clock. Someone who sells a big asset at retirement and then lives on a modest income may leave some carryover unused.
- Your province or territory. The carryover works against federal tax only. A provincial minimum tax, if yours has one, has its own form, and my example leaves it out.
What should I check before the end of 2026?
If you expect a large sale, look at which tax year the gain lands in before you sign. In the estimate above a $400,000 gain and a $600,000 gain behave very differently under the AMT, so the closing date can matter. A January closing has legal and financial effects beyond tax, so put that question to your own advisor.
Whatever happened in 2026, keep a copy of each year’s T691 and write down the Part 8 balance. The 2026 return is due 30 April 2027 (15 June 2027 if you or your spouse are self-employed, with any balance still due 30 April). You can model the gain with the capital gains tax calculator and look at your regular rates with the marginal tax rate calculator. Rental owners may also want to read about capital gains on rental property. The CRA’s Canada Revenue Agency: line 41700 minimum tax and Canada Revenue Agency: Form T691 pages are the place to start.
Where does this information come from?
The AMT rate, exemption, credit percentages and carryover steps come from the CRA’s 2025 Form T691 and its line 41700 page; the 2026 exemption is the start of the fourth federal bracket on the CRA rates page, and the dollar examples are estimates from this site’s own engine. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Can I claim the AMT carryover in a year when I owe no AMT?
Yes. Fill in Parts 1, 2 and 8 of Form T691, enter the claim on line 40427 and attach the form to a paper return. The claim is capped at your regular federal tax payable minus that year's AMT amount, or at your remaining carryover if that is smaller.
Does AMT I paid for 2018 still count?
No. The 2025 T691 takes any unapplied 2018 carryover out of the total available for 2026, because the 7-year window has closed. AMT paid for 2026 can be used through 2033, as long as you have enough regular federal tax to absorb it.
Does the carryover lower my provincial tax?
No. The T691 carryover works against federal tax payable. Provincial or territorial minimum tax, where your province has one, runs on its own form and rules, so check your provincial return. The example in this article covers federal tax only.
Is the capital gains inclusion rate two-thirds now?
No. The proposed increase to two-thirds was cancelled, so regular tax still counts 50% of a capital gain in 2026. The AMT counts 100% of most gains, which is why a large gain can produce a minimum tax bill even when your normal tax looks fine.
Where do I find my carryover balance?
On Form T691. Part 8 ends with the total minimum tax carryover available for the next year (line 17 on the 2025 form). If old forms went missing, your CRA account may show past assessments, so you can rebuild the balance from earlier returns.