Treasury further weakens corporate alternative minimum tax

The Treasury Department released interim guidance Wednesday on the corporate alternative minimum tax, further restricting the reach of the 15% tax on billion-dollar corporations imposed under the Biden administration's Inflation Reduction Act of 2022.

"Democrats' CAMT regime is a flawed, partisan experiment hatched in the minds of liberal academics who lacked practical experience," said Treasury Secretary and acting Internal Revenue Service commissioner Scott Bessent in a statement. "In the real world, CAMT disrupted productive business activities and added undue costs, while failing to deliver on promised tax revenues. President Trump's Treasury Department will continue to restore sanity to tax administration, using its authority to provide clarity and to keep bureaucracy out of the way of job growth and investment."

Notice 2026-7 provides interim guidance regarding the application of the CAMT under Sections 55, 56A and 59 of the Tax Code. Section 3 of the notice modifies the interim guidance provided in Section 4 of Notice 2025-49 and addresses an adjustment to adjusted financial statement income for tax deductible repairs with respect to Section 168 property.  Section 4 of the latest notice modifies the interim guidance provided in Section 9 of Notice 2025-49 and addresses an adjustment to AFSI for Section 197 amortization attributable to certain intangibles.  Section 5 of this notice addresses an adjustment to AFSI for amortization of domestic research or experimental expenditures. Section 6 of the notice addresses an adjustment to AFSI for certain production costs attributable to film, television, live theatrical, and sound recording productions.  Section 7 of the new notice addresses an adjustment to AFSI for certain low acquisition cost tangible property treated as materials and supplies. Section 8 of the notice clarifies and modifies the interim guidance for financially troubled companies provided in Section 4 of Notice 2025-46.  Section 9 of this notice modifies the anti-abuse rule in proposed § 1.56A-4 that would apply to certain covered asset transactions.  Section 10 of this notice addresses certain CAMT consequences of transactions involving intangible property subject to Section 367(d).  Section 11 of the new notice provides the applicability dates and requirements for reliance. 

The move is the latest piece of guidance from the Treasury Department providing ways for companies to avoid the CAMT. Last week, the Senate blocked a resolution by a group of Senate Democrats opposing earlier guidance. 

Last year, the Treasury and the Internal Revenue Service issued notices and revised proposed regulations on the CAMT, which had imposed a 15% minimum tax on a small number of corporations earning over $1 billion in "adjusted financial statement income." The CAMT differed in many respects from the so-called Pillar 2 global minimum tax of 15% under the Organization of Economic Cooperation and Development's efforts to impose some taxes on multinationals, but was seen as a step in that direction. However, the new guidance from the Treasury and the IRS would allow them to mostly avoid such taxes. The OECD has already moved to exempt most U.S. corporations from its global minimum tax under pressure from the Trump administration.

The Treasury Department plans further changes in the CAMT rules. The Treasury accused Democrats in a press release of passing the Inflation Reduction Act under "one-party Democrat control," and claimed the "CAMT labyrinth has imposed significant administrative costs—even in cases where no CAMT is owed—while penalizing businesses that hire and invest in the United States. Since President Trump took office, Treasury has used its authority defined by Congress to reduce uncertainty around CAMT rules and avoid any unnecessary impediments to U.S. innovation, investment and job creation. Recent guidance, along with today's announcement, will enable Treasury to re-propose the entire CAMT regulatory framework to reflect stakeholder feedback and ensure final rules that are workable and predictable."

The National Association of Manufacturers praised the new guidance after pushing for the changes.

"Congress and the Trump administration passed a once-in-a-generation tax law last summer, and now Treasury is building on that win," said NAM vice president of policy Charles Crain in a statement. "The Corporate Alternative Minimum Tax has threatened manufacturers' ability to raise wages, hire workers and invest in their communities since it was enacted in 2022. With today's proposal, Treasury has taken a step toward fixing this fundamentally unworkable regime. In particular, the proposed changes to protect H.R. 1's restoration of immediate expensing for R&D costs will ensure manufacturers are not penalized for their commitment to making investments that drive innovation. Manufacturers conduct 52% of private-sector research — investments that will continue to drive the industry and the economy given that 80% of manufacturers say AI innovation will be essential to grow or maintain their business by 2030.

"The Trump administration is meeting the moment by taking urgent action to supercharge private-sector R&D," he added. "Manufacturers called for this critical change, and we thank Treasury for taking this important step to support manufacturing innovation and ensure the continued success of H.R. 1 for our industry."