Corporate Alternative Minimum Tax (CAMT) Interim Guidance under IRS Notice 2025-27

Indhira Demorizi
Aug 23
6 min read

Updated: Aug 25

On June 2, 2025, Treasury issued Notice 2025-27 providing significant interim guidance on the application of the Corporate Alternative Minium Tax (“CAMT”).

On July 29, 2025, Treasury issued Notice 2025-28 providing interim guidance and some relief for corporations subject to CAMT with partnership investments and addressing complexity and administrative burden in the proposed regulations.

The changes are designed to provide welcome relief and make compliance with CAMT rules more manageable and less burdensome for corporations that are unlikely to be subject to the tax.

This insight highlights key aspects of Notice 2025-27. For highlights on Notice 2025-28, please see our separate insight.

Background on CAMT

CAMT, also known as the ‘book minimum tax’ was enacted as part of the Inflation Reduction Act of 2022 to ensure that large and highly profitable companies pay a baseline amount of U.S. tax, regardless of their regular U.S. tax liability. In effect, under the statute, CAMT:

Imposes a 15% minimum tax on an applicable corporation’s adjusted financial statement income (AFSI), generally based on net income reported in financial statements with certain adjustments.
Applies to a corporation that is a member of a foreign-parented multinational group. It does not apply exclusively to U.S. corporations. Foreign corporations are subject to CAMT only on income that is effectively connected with a U.S. trade or business.
Establishes AFSI thresholds (tests) to determine what is an applicable corporation for this purpose. While there are various nuances to how the thresholds are defined and there are other factors to consider, at its core:
- For a corporation that is not a member of a foreign-parented multinational group (other than S corporations, RICs, or REITs), an applicable corporation is defined as one with average annual AFSI exceeding $1 billion over a three-year period.
- For a corporation that is a member of a foreign-parented multinational group, there is a two-part test.
  - CAMT can apply to U.S. subsidiaries or branches of foreign-parented multinational groups if the group’s combined average annual AFSI (1) exceeds $1 billion and (2) the corporation’s average annual AFSI is at least $100 million over a three-year period.

Since enactment of this provision, Treasury and the IRS have issued proposed regulations and technical corrections, while also providing for a simplified method – including a safe harbor on adjusted AFSI thresholds -- yet numerous public comments were submitted in response which Treasury and the IRS continue to consider and study.

The table below shows the AFSI thresholds as provided under the statute, the proposed regulations, and Notice 2025-27.

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Notice 2025-27 - Key Highlights

The interim guidance provides relief and clarity for corporations navigating the new CAMT rules and related compliance requirements.

Some key highlights:

Introduces an interim, simplified method for determining whether a corporation is an "applicable corporation" subject to the CAMT.
The simplified method is optional and intended to reduce compliance burdens for corporations unlikely to be subject to CAMT.
The average annual AFSI threshold is $800 million for corporations that are not part of a foreign-parented multinational group, and $80 million for U.S. members of such groups.
Corporations can use the interim simplified method for any tax year ending on or before the date final regulations are published in the Federal Register, provided the original federal income tax return has not been filed as of June 23, 2025.
Use of the simplified method does not violate reliance and consistency rules in the proposed regulations.
Allows additional AFSI adjustments, including those related to certain tax credits, such as amounts received from transferring credits under IRC § 6418 and amounts treated as tax-exempt income under IRC § 48D(d)(2) or § 6417(c).
The IRS is waiving the addition to tax under IRC § 6655 for underpayment of estimated income tax to the extent the underpayment is attributable to a corporation’s CAMT liability for tax years beginning after December 31, 2022, and before January 1, 2026 ("Covered CAMT Years") – in effect when taken together with penalty waivers in Notice 2024-66 and Notice 2023-42.
Corporations below the new thresholds are generally not considered applicable corporations for the tax year and are not required to file Form 4626.

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Potential Benefits

The potential benefits for corporations using the simplified method may include:

Higher exemption thresholds (compared to the thresholds in the proposed regulations)
Reduced compliance burden: The method streamlines the process for determining applicable corporation status, minimizing the need for complex calculations and documentation for corporations unlikely to be subject to CAMT.
Simplified AFSI calculation: Only a limited set of adjustments to AFSI are required, making the calculation process more straightforward compared to the general rules.
Administrative relief for short periods and fiscal years: The method allows application of thresholds over the three-AFS-year period ending during the tax year, simplifying the determination for corporations with non-calendar fiscal years or short periods.
Penalty relief for estimated tax underpayments: The IRS waives penalties for underpayment of estimated tax attributable to CAMT for certain years, providing flexibility and reducing penalty risk during the transition to new rules.
No adverse reliance or consistency consequences: Using the simplified method does not violate reliance or consistency rules, even if the corporation later becomes subject to the general rules or new regulations are issued.
No adoption of proposed regulations required - A corporation is not required to adopt any of the proposed regulations in order to use the new Interim Simplified Method.

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Potential Limitations

The temporary nature of IRS Notice 2025-27 gives corporations short-term flexibility and reduces compliance burdens by allowing use of an interim simplified method for CAMT determination and waiving certain penalties for 2025. However, this relief is only available until final regulations are published.

Corporations may then need to adapt their tax planning and compliance processes to align with the finalized rules, which may be more complex or differ from the interim guidance, creating uncertainty and potential future administrative burdens.

Further, consider that:

It is only a temporary measure, creating uncertainty for future years.
The adjusted AFSI thresholds may exclude some corporations that would otherwise be subject to CAMT, leading to inconsistent application.
Reliance and consistency rules only apply for the interim period, so corporations may face challenges if the final rules differ.
To avoid a penalty notice, taxpayers still need to file a Form 2220, Underpayment of Estimated Tax by Corporations, with their U.S. federal tax return, even if they owe no estimated tax penalty, and follow other procedural steps.
Penalty relief is limited to CAMT liability and does not extend to other tax code provisions; and
Corporations may face additional compliance burdens when final regulations are issued and may need to revisit or amend prior filings.

Forthcoming Guidance

Treasury indicated its intention to issue additional guidance on various aspects of CAMT, in consideration of public comments received, specifically to address:

The interaction of the CAMT and the tonnage tax regime enacted by the American Jobs Creation Act of 2004, Public Law 108-357, 118 Stat. 1418 (October 22, 2004),
How unrealized gains and losses on certain investment assets reported for financial statement purposes are taken into account for purposes of determining AFSI,
alternative rules for determining a partner's distributive share of partnership AFSI. Please see our insight on IRS Notice 2025-28.
AFSI adjustments resulting from certain transactions between a partner and partnership,
AFSI adjustments resulting from certain corporate transactions, and
Alternative rules for early reliance on the CAMT Proposed Regulations.

We recommend monitoring tax developments in this area if your business is likely to fall within the scope of CAMT.

How We Can Help

We assist management in navigating the complexities of CAMT through a variety of approaches. These include discussing, reviewing, and evaluating the applicability of the interim simplified method based on your company’s specific circumstances, assessing your current strategy, and recommending next steps.

For more information, contact us.

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Disclaimer

The contents of this insight are intended for general information only. illumina CPA Group, Inc. is not, by means of this communication, rendering professional advice or services. Before making any decisions or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.