IRS Instruction 4626 – IRS Forms, Instructions, Pubs 2026 – Large U.S. corporations face a critical compliance requirement under the Corporate Alternative Minimum Tax (CAMT). IRS Instruction 4626 provides the official guidance for completing Form 4626, which helps corporations determine if they qualify as an “applicable corporation” and calculate any additional tax owed.
This comprehensive article breaks down the purpose of Form 4626, who must file it, key calculations, recent updates, and practical tips. It draws from the latest official IRS resources as of 2025-2026.
Download the official IRS Instructions for Form 4626 (PDF) here:
https://www.irs.gov/pub/irs-pdf/i4626.pdf
You can also access the current Form 4626 at the IRS website.
What Is the Corporate Alternative Minimum Tax (CAMT)?
The Inflation Reduction Act of 2022 introduced the CAMT to ensure that very large corporations pay a minimum level of tax. It applies a 15% tax on adjusted financial statement income (AFSI) for applicable corporations, rather than relying solely on taxable income.
Corporations compare their tentative minimum tax (generally 15% of AFSI, minus allowable credits) against their regular tax liability plus any base erosion minimum tax. They pay the higher amount. This prevents large profitable companies from paying little or no federal income tax due to deductions, credits, or other preferences.
Note: The original corporate AMT was repealed for tax years after 2017 by the Tax Cuts and Jobs Act. The current version is a new “book minimum tax” based on financial statements.
Who Must File Form 4626?
Most corporations must file Form 4626 with their income tax return (such as Form 1120) to determine applicable corporation status. Attach it even if no CAMT is due.
Filing exclusions include:
- S corporations
- Regulated investment companies (RICs)
- Real estate investment trusts (REITs)
- Certain tax-exempt organizations with no unrelated business taxable income (even if part of a controlled group)
- Corporations that qualify for (and elect) a simplified safe harbor method and were not applicable corporations in a prior year
If a corporation was an applicable corporation in a prior year, it generally must continue filing Form 4626 until it meets specific cessation rules (e.g., five consecutive years below the threshold or certain ownership changes).
Pro tip: Even corporations that qualify for a safe harbor often need to perform simplified calculations and retain records. They may also check a box on Form 1120, Schedule K.
Determining Applicable Corporation Status (The AFSI Test)
A corporation is generally an “applicable corporation” if its average annual AFSI exceeds $1 billion over the three tax years ending after December 31, 2021, preceding the current year.
For members of a foreign-parented multinational group (FPMG): There is an additional $100 million AFSI test for the U.S. members (while the group meets the $1 billion test).
AFSI starts with net income or loss from the corporation’s applicable financial statement (AFS — typically a certified GAAP or IFRS financial statement) and includes numerous adjustments, such as:
- Disregarding certain taxes
- Specific depreciation and amortization rules
- CFC (controlled foreign corporation) adjustments
- Partnership distributive share rules
- Financial statement net operating loss (FSNOL) reductions (limited to 80% in the CAMT computation)
Safe Harbors and Simplified Methods (2025 Updates)
The IRS provides relief to reduce compliance burden:
- Interim simplified method (Notice 2025-27): Uses higher thresholds of $800 million (general) or $80 million (FPMG) with limited adjustments. Many corporations can use a worksheet to qualify and avoid completing the full Form 4626.
- Proposed regulations offered a $500 million/$50 million safe harbor (still relevant in some contexts).
Corporations should review the Interim Simplified Method (Safe Harbor) Calculation Worksheet in the instructions.
Item C on the 2025 form allows corporations that already know they are applicable to skip Part I and go directly to the tax computation.
Step-by-Step Guide to Completing Form 4626
Part I: Applicable Corporation Determination
Calculate 3-year average AFSI with detailed adjustments (lines 1–16). Check controlled group or FPMG status.
Part II: Corporate Alternative Minimum Tax Computation
Compute AFSI for the current year, apply FSNOL reduction, calculate 15% tentative minimum tax, subtract CAMT foreign tax credit, and compare to regular tax + base erosion tax.
Part III: Adjustment for Certain Taxes
Detail federal and foreign taxes to exclude from AFSI.
Part IV: CAMT Foreign Tax Credit
Compute allowable credits, including CFC taxes (with carryovers).
Part V & VI, Schedules:
Handle controlled groups, FPMGs, and CFC pro-rata shares.
The instructions include extensive details on adjustments (lines 2a–2z), worksheets, and statements required (e.g., describing guidance relied upon, such as specific proposed regulations or notices).
Key Recent Updates for 2025–2026
- New Item C and expanded safe harbor worksheet.
- Multiple interim notices (2025-27, 2025-28, 2025-46, 2025-49) simplifying partnership AFSI, domestic transactions, financially troubled companies, consolidated groups, and fair value items.
- Guidance on reliance periods for proposed regulations issued in 2024.
- Penalty relief in certain cases for estimated tax underpayments related to CAMT.
Tax rules in this area continue to evolve, so always verify the latest IRS notices and instructions.
Practical Tips for Corporations
- Start early — Gathering AFS data and performing adjustments is complex and time-consuming.
- Coordinate with financial reporting teams — AFSI is based on financial statements, not just tax books.
- Consider elections and methods — Top-down or taxable-income approaches for partnerships (per Notice 2025-28) can simplify calculations.
- Document everything — Attach required statements describing the approach and guidance relied upon.
- Consult professionals — CAMT involves intricate rules for CFCs, FPMGs, consolidated returns, and international operations. This article is for informational purposes only and is not tax advice.
Frequently Asked Questions (FAQs)
- Do all corporations need to file Form 4626?
No. Small corporations below the thresholds (especially those qualifying for safe harbors) and certain entity types are exempt, provided they were not previously applicable. - What is the CAMT tax rate?
15% on adjusted financial statement income (with reductions and credits). - Where can I download the form and instructions?
Official PDF: IRS Instructions for Form 4626 and the form itself from IRS.gov. - How does the safe harbor work?
It uses simplified calculations and higher thresholds ($800M/$80M under the interim method) to determine non-applicable status without full-form preparation.
Conclusion
IRS Instruction 4626 is essential for compliance with the Corporate Alternative Minimum Tax. Understanding AFSI, safe harbors, and proper form completion helps large corporations avoid surprises and penalties.
Download the latest instructions now: https://www.irs.gov/pub/irs-pdf/i4626.pdf
For personalized advice, consult a qualified tax professional or CPA familiar with CAMT. Check IRS.gov regularly for updates, as additional guidance may be released.
This guide is based on 2025 IRS instructions and related notices. Tax laws can change; verify with primary sources for your specific situation.