Notice 2026-7 Just Landed on Your Desk: Why CAMT Is Now Consuming 10% of Corporate Tax Budgets — And Rewriting Every Planning Conversation You Have

The numbers don't flatter the original premise. When Congress enacted the Corporate Alternative Minimum Tax as part of the 2022 Inflation Reduction Act, Treasury projected roughly 100 large corporations would actually pay it annually. By the AICPA's analysis, that projection still holds, with an average effective CAMT rate of just 2.6% for those paying. What nobody modeled was the compliance infrastructure that would fan out from those 100 companies to engulf thousands of others — and the advisory firms serving them. A Tax Executives Institute survey, analyzed by Bloomberg Tax, found that CAMT now absorbs a median 10% of total corporate tax compliance budgets. Only 23.4% of respondents reported actual CAMT liability. The remaining 76.6% are running a full parallel computation to confirm they owe nothing — and absorbing that cost inside engagement structures priced for something far simpler.

Notice 2026-7, released February 18, 2026, is the fifth major interim guidance package the IRS has issued since CAMT took effect, following Notices 2025-27, 2025-28, 2025-46, and 2025-49. Each one has modified the adjusted financial statement income (AFSI) calculation framework mid-flight. Firms that scoped CAMT work as a discrete engagement in 2022 or early 2023 are now operating a compliance service line with no natural off-ramp, against assumptions that have proven wildly insufficient.

What Notice 2026-7 Actually Changed — And Why Firms Are Still Rebuilding Calculations

The February 2026 guidance addresses five categories of AFSI adjustment that had previously forced companies to maintain separate tracking systems: repair and maintenance costs capitalized under GAAP but deducted under Section 162-4, Section 197 intangible amortization not reflected in book income until impairment, domestic Section 174 amortization generated by the TCJA's R&D capitalization rules, Section 181 production costs for film and media, and low-cost materials and supplies treated differently under book and tax. In each case, Sullivan & Cromwell's analysis notes the guidance aligns CAMT treatment with regular tax results rather than financial accounting outcomes.

KPMG's Monisha Santamaria characterized Notice 2026-7 as "the most taxpayer-favorable guidance" issued to date. Treasury Secretary Scott Bessent went further, stating CAMT had "disrupted productive business activities and added undue costs" and that Treasury will "re-propose the entire CAMT regulatory framework," as Accounting Today reported.

The administration's rhetoric matters less than the operational reality practitioners face. Taxpayers who relied on prior computation methods for 2023 and 2024 may need to amend returns or adjust carryforward positions. The repair cost and intangible amortization adjustments require tracking eligible assets from acquisition through disposition. As BDO noted, once adopted, most new adjustments must continue under consistency requirements in subsequent years. CPA firms are building persistent data systems that will require maintenance through every future guidance cycle — not completing a project.

The 10% Budget Drain: How CAMT Became a Fixed Cost Even for Clients Who Don't Owe It

The Bloomberg Tax survey provides the most granular picture available of CAMT's actual resource impact. Initial implementation consumed between 100 and 1,000 hours at the median firm; nearly 20% of respondents exceeded $100,000 in internal setup costs. Nearly one-third spent more than $50,000 on external advisors and software. Two respondents exceeded $1 million in external spend. In steady state, annual CAMT compliance still runs 101 to 1,000 internal hours with $10,001 to $50,000 in recurring internal costs, before external advisory fees.

The median 10% budget share holds even across companies with zero CAMT liability, because the computation to confirm zero liability is structurally identical to the computation that determines actual liability. The AICPA has flagged this architecture directly, arguing that the proposed regulations "impose a massive compliance burden on all U.S. taxpayers" not meeting the $500 million AFSI safe harbor — not just the cohort with actual exposure.

For CPA firms, this creates a service delivery problem that pricing models haven't addressed. Clients aren't paying for a discrete return line item. They're funding a parallel accounting system that typically produces a CAMT number of zero. The advisory narrative around that work — explaining why it exists, what it covers, and why it persists — is itself a billable conversation that most engagement letters don't contemplate.

Tax Incentives Your Clients Counted On Are Now Conditional

The interaction between CAMT and IRA tax incentives is where the real planning disruption concentrates. IRA-era credits under Sections 45 and 48, and their successors 45Y and 48E governing projects placed in service from 2025 onward, can offset CAMT liability up to 75% of combined regular and minimum tax. But the AFSI consequences of claiming them require modelling that didn't exist in most engagement frameworks when clients first projected their IRA incentive stacks.

Wolters Kluwer's 2026 outlook for accounting firms describes CAMT as the "silent killer" of tax incentives, particularly for clients who structured Section 174 deductions as a planning centerpiece. A company that modeled aggressive R&D expensing under the restored Section 174A rules may find the corresponding AFSI reduction under Notice 2026-7 is offset by other AFSI inclusions, leaving a CAMT liability where none was anticipated. Every incentive projection now requires a CAMT filter as a primary step, before IRA credit valuations can be treated as reliable.

Practitioners running ASC 740 analyses face the same issue from the financial reporting side. CAMT can generate uncertain tax positions, valuation allowance questions, and deferred tax asset recalculations that weren't embedded in prior-year effective tax rate models. Firms with integrated tax provision practices are better positioned, but even they are recalculating for clients whose CAMT exposure shifted materially with each guidance release.

The Pricing Problem: Why Firms Under-Scoped CAMT Work Before the Guidance Kept Coming

When firms first priced CAMT work in 2022 and early 2023, the regulatory picture was genuinely opaque. The IRS had not issued proposed regulations. The AFSI calculation framework was conceptually established but mechanically undefined. Most engagement letters treated CAMT analysis as an extension of existing corporate compliance work, or as a one-time assessment with a defined deliverable.

Five guidance packages later, the scope of what CAMT compliance actually entails is clear: a parallel federal income tax computation, running on financial statement data, with its own adjustment framework that evolves through interim guidance, with interactions across ASC 740, estimated tax payments, IRA incentive modelling, and Pillar Two calculations. The Bloomberg Tax survey found respondents characterizing CAMT as a "compliance burden and nightmare," layered on top of GILTI, Pillar Two, and other minimum tax regimes that themselves demand substantial resources.

Firms absorbing CAMT scope creep within legacy pricing are subsidizing a service they cannot sustain. The choice is repricing existing relationships or reframing CAMT as a distinct advisory offering with its own engagement structure. The Big Four and top national firms have already made that structural decision, as evidenced by their investment in dedicated CAMT guidance infrastructure and the institutional analysis each new notice triggers.

How Leading Firms Are Restructuring CAMT Advisory Into a Standalone Practice

The pattern at major firms is visible in their guidance output and practice organization. KPMG, Deloitte, BDO, and PwC have each built dedicated CAMT advisory capacity — internal playbooks, data workflow systems, and specialized teams at the intersection of financial reporting and federal tax. Each guidance release triggers an institutional analysis and coordinated client outreach cycle. This is practice group behavior operating on a defined cadence, not ad hoc compliance response.

For mid-size and regional firms serving large private companies or public companies with complex capital structures, the structural logic is the same even if the scale differs. CAMT advisory requires a consistent data feed from the client's financial statement team, an ongoing relationship with the ASC 740 preparer, and familiarity with the full body of interim guidance. Routing CAMT questions to whoever handles the federal return is no longer a viable workflow.

Wolters Kluwer recommends integrating CAMT diagnostics into quarterly advisory processes rather than year-end assessments, embedding CAMT modelling into estimated tax planning and provision engagements. Firms that have made this structural shift are positioned to absorb future guidance releases without repricing emergencies and deliver a more defensible advisory product than the year-end CAMT memo review that many clients still receive.

Preparing for the Next Wave of Guidance

Treasury's announced intent to re-propose the entire CAMT regulatory framework is not a signal that compliance will simplify in the near term. It signals that the existing proposed regulations — upon which taxpayers may currently rely under Notice 2026-7 — will be replaced by a new rulemaking process with a comment period, potential revisions, and ultimately final regulations. Between now and then, additional interim guidance is probable as technical issues surface in areas the current notices left unresolved. The KPMG analysis of Notice 2026-7 identifies open questions including the interaction between the new adjustments and consolidated group rules.

Firms that treat each guidance release as a discrete technical update rather than as an incremental development in an ongoing regulatory architecture will keep getting caught mid-engagement. The productive posture is scenario-based planning: maintaining CAMT computation models that can be updated when new guidance drops, with clear protocols for how client notification and re-analysis flows through the practice. That process design is now core to what sophisticated CAMT advisory looks like — and clients whose advisors haven't built it are exposed to both planning surprises and billing disputes that no one scoped for in 2022.