§ 26 Limitation based on tax liability; definition of tax liability

OLRC 119-134 · eCFR 2026-10-19 · 27 amending Acts · cited by 12 sections

Enacted 1984 · Pub. L. 98-369 Amended · 27 Acts

19841986198819891996199719981999200020012002200420052006200720082009201020132014201720182021(a) Limitation based on amount of tax(b) Regular tax liability(c) Tentative minimum tax
Connections Cited by 12 · Cites 22
§ 26 Limitation based on tax liability; definition of tax liability
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(a) Limitation based on amount of tax The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the sum of—

Amended 1986, 1998, 1999, 2013
  • 2013 Pub. L. 112-240 Pub. L. 112–240 amended subsec. (a) generally. Prior to amendment, subsec. (a) related to limitation based on amount of tax with a special rule for taxable years 2000 through 2011.
  • 1999 Pub. L. 106-170 Pub. L. 106–170 reenacted subsec. heading without change and amended text generally. Prior to amendment, text read as follows: “The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the excess (if any) of—

    “(1) the taxpayer’s regular tax liability for the taxable year, over

    “(2) the tentative minimum tax for the taxable year (determined without regard to the alternative minimum tax foreign tax credit).

    For purposes of paragraph (2), the taxpayer’s tentative minimum tax for any taxable year beginning during 1998 shall be treated as being zero.”

  • 1998 Pub. L. 105-277 Pub. L. 105–277 inserted concluding provisions.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(1)(A), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the taxpayer’s tax liability for such taxable year.”
Cited by 9

    (1) the taxpayer’s regular tax liability for the taxable year reduced by the foreign tax credit allowable under section 27, and

    Amended 2001, 2002, 2008, 2009, 2010, 2018
    • 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(1)(D)(ii), substituted “section 27” for “section 27(a)”.
    • 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(b)(2)(E), (c), as amended by Pub. L. 111–312, § 101(b)(1), temporarily struck out “23,” before “24,” in introductory provisions. See Effective and Termination Dates of 2010 Amendment note below.
    • 2009 Pub. L. 111-5 Pub. L. 111–5, § 1144(b)(1)(D), inserted “30B,” after “30,” in introductory provisions.
    • 2009 Pub. L. 111-5 Pub. L. 111–5, § 1142(b)(1)(D), inserted “30,” after “25D,” in introductory provisions.
    • 2009 Pub. L. 111-5 Pub. L. 111–5, § 1004(b)(3), inserted “25A(i),” after “24,” in introductory provisions.
    • 2008 Pub. L. 110-343 Pub. L. 110–343, § 205(d)(1)(D), substituted “25D, and 30D” for “and 25D” in introductory provisions.
    • 2008 Pub. L. 110-343 Pub. L. 110–343, § 106(e)(2)(D), substituted “25B, and 25D” for “and 25B” in introductory provisions.
    • 2002 Pub. L. 107-147 Pub. L. 107–147, § 417(23)(B), amended directory language of Pub. L. 107–16, § 618(b)(2)(C). See 2001 Amendment note below.
    • 2001 Pub. L. 107-16 Pub. L. 107–16, § 618(b)(2)(C), as amended by Pub. L. 107–147, § 417(23)(B), substituted “, 24, and 25B” for “and 24” in introductory provisions.
    • 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(f)(2)(C), substituted “sections 23 and 24” for “section 24” in introductory provisions.
    • 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(2)(D), inserted “(other than section 24)” after “this subpart” in introductory provisions.

    (2) the tax imposed by section 55(a) for the taxable year.

    Amended 2002, 2004, 2006, 2007, 2008, 2009, 2010
    • 2010 Pub. L. 111-312 Pub. L. 111–312, § 202(a), substituted “2011” for “2009” in heading and “2009, 2010, or 2011” for “or 2009” in introductory provisions.
    • 2009 Pub. L. 111-5 Pub. L. 111–5, § 1011(a), substituted “2009” for “2008” in heading and “2008, or 2009” for “or 2008” in introductory provisions.
    • 2008 Pub. L. 110-343 Pub. L. 110–343, § 101(a), substituted “2008” for “2007” in heading and “2007, or 2008” for “or 2007” in introductory provisions.
    • 2007 Pub. L. 110-166 Pub. L. 110–166 substituted “2007” for “2006” in heading and “2006, or 2007” for “or 2006” in introductory provisions.
    • 2006 Pub. L. 109-222 Pub. L. 109–222 substituted “2006” for “2005” in heading and “2005, or 2006” for “or 2005” in introductory provisions.
    • 2004 Pub. L. 108-311 Pub. L. 108–311, § 312(a), substituted “rule for taxable years 2000 through 2005” for “rule for 2000, 2001, 2002, and 2003” in heading and “2003, 2004, or 2005” for “or 2003” in text.
    • 2002 Pub. L. 107-147 Pub. L. 107–147, § 601(a), substituted “rule for 2000, 2001, 2002, and 2003” for “rule for 2000 and 2001” in heading and “during 2000, 2001, 2002, or 2003,” for “during 2000 or 2001,” in introductory provisions.

    (b) Regular tax liability For purposes of this part—

    Amended 1986
    • 1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(1)(B)(i), (v), substituted “Regular tax liability” for “Tax liability” in heading and “this part” for “this section” in introductory provisions.
    Cited by 15

      (1) In general The term “regular tax liability” means the tax imposed by this chapter for the taxable year.

      Amended 1986
      • 1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(1)(B)(ii), substituted “regular tax liability” for “tax liability”.
      Cited by 5

        (2) Exception for certain taxes For purposes of paragraph (1), any tax imposed by any of the following provisions shall not be treated as tax imposed by this chapter:

        Amended 1986
        • 1986 Pub. L. 99-499 Pub. L. 99–499 added subpar. (B) and redesignated former subpars. (B) to (J) as (C) to (K), respectively.
        • 1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(1)(B)(iii), substituted “section 55 (relating to minimum tax)” for “section 56 (relating to corporate minimum tax)” in subpar. (A).
        • 1986 Pub. L. 99-514 Pub. L. 99–514, § 632(c)(1), substituted “certain built-in gains” for “certain capital gains” in subpar. (G).
        • 1986 Pub. L. 99-514 Pub. L. 99–514, § 261(c), added subpar. (I).
        • 1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(1)(B)(iv), added subpar. (J).
        Cited by 1

          (A) section 55 (relating to minimum tax),

          (B) section 59A (relating to base erosion and anti-abuse tax),

          Amended 2014, 2017
          • 2017 Pub. L. 115-97 Pub. L. 115–97 added subpar. (B).
          • 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(12)(B), struck out subpar. (B) which read as follows: “section 59A (relating to environmental tax),”.

          (C) subsection (m)(5)(B), (q), (t), or (v) of section 72 (relating to additional taxes on certain distributions),

          Amended 1988, 1989
          • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(c)(1), amended subpars. (C) and (D) generally. Prior to amendment, subpars. (C) and (D) read as follows:
          • 1989 “(C) subsection (m)(5)(B) (q), or (v) of section 72 (relating to additional tax on certain distributions),
          • 1989 “(D) section 72(t) (relating to 10-percent additional tax on early distributions from qualified retirement plans),”.
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011A(c)(10)(A), struck out “, (o)(2),” after “subsection (m)(5)(B)”.
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 5012(b)(2), substituted “(q), or (v)” for “or (q)”.

          (D) section 143(m) (relating to recapture of proration of Federal subsidy from use of mortgage bonds and mortgage credit certificates),

          Amended 1988, 1989
          • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(c)(1), amended subpars. (C) and (D) generally. Prior to amendment, subpars. (C) and (D) read as follows:
          • 1989 “(C) subsection (m)(5)(B) (q), or (v) of section 72 (relating to additional tax on certain distributions),
          • 1989 “(D) section 72(t) (relating to 10-percent additional tax on early distributions from qualified retirement plans),”.
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011A(c)(10)(B), substituted “72(t) (relating to 10-percent additional tax on early distributions from qualified retirement plans)” for “408(f) (relating to additional tax on income from certain retirement accounts)”.

          (E) section 530(d)(4) (relating to additional tax on certain distributions from Coverdell education savings accounts),

          Amended 1997, 2001, 2005
          • 2005 Pub. L. 109-135 Pub. L. 109–135, § 412(c), substituted “section 530(d)(4)” for “section 530(d)(3)”.
          • 2001 Pub. L. 107-22 Pub. L. 107–22 substituted “Coverdell education savings” for “education individual retirement”.
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).

          (F) section 531 (relating to accumulated earnings tax),

          Amended 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).

          (G) section 541 (relating to personal holding company tax),

          Amended 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).

          (H) section 1351(d)(1) (relating to recoveries of foreign expropriation losses),

          Amended 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).

          (I) section 1374 (relating to tax on certain built-in gains of S corporations),

          Amended 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).

          (J) section 1375 (relating to tax imposed when passive investment income of corporation having subchapter C earnings and profits exceeds 25 percent of gross receipts),

          Amended 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).

          (K) subparagraph (A) of section 7518(g)(6) (relating to nonqualified withdrawals from capital construction funds taxed at highest marginal rate),

          Amended 1988, 1989, 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).
          • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(c)(2), added subpar. (K) and struck out former subpar. (K) which was identical.
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1007(g)(1), substituted “corporations).” for “corporations,”.

          (L) sections 871(a) and 881 (relating to certain income of nonresident aliens and foreign corporations),

          Amended 1988, 1989, 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).
          • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(c)(2), added subpars. (L) and (M) and struck out former subpars. (L) and (M) which read as follows:
          • 1989 “(L) section 860E(e) (relating to taxes with respect to certain residual interests), and
          • 1989 “(L) section 884 (relating to branch profits tax), and
          • 1989 “(M) section 143(m) (relating to recapture of portion of federal subsidy from use of mortgage bonds and mortgage credit certificates).”
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1012(q)(8), added subpar. (L) relating to branch profits tax.
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1006(t)(16)(C), added subpar. (L) relating to taxes with respect to certain residual interests.

          (M) section 860E(e) (relating to taxes with respect to certain residual interests),

          Amended 1988, 1989, 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).
          • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(c)(2), added subpars. (L) and (M) and struck out former subpars. (L) and (M) which read as follows:
          • 1989 “(L) section 860E(e) (relating to taxes with respect to certain residual interests), and
          • 1989 “(L) section 884 (relating to branch profits tax), and
          • 1989 “(M) section 143(m) (relating to recapture of portion of federal subsidy from use of mortgage bonds and mortgage credit certificates).”
          • 1988 Pub. L. 100-647 Pub. L. 100–647, § 4005(g)(4), added subpar. (M).

          (N) section 884 (relating to branch profits tax),

          Amended 1989, 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).
          • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7821(a)(4)(A), which directed amendment of subsec. (b)(2) of this section “as amended by section 11811” by adding subpar. (N), was executed as if it directed amendment of subsec. (b)(2) of this section “as amended by section 7811”, to reflect the probable intent of Congress and the renumbering of section 11811 of H.R. 3299 as section 7811 prior to the enactment of H.R. 3299 into law as Pub. L. 101–239.

          (O) sections 453(l)(3) and 453A(c) (relating to interest on certain deferred tax liabilities),

          Amended 1996, 1997
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), added subpar. (E) and redesignated former subpars. (E) to (N) as (F) to (O), respectively. Former subpar. (O) redesignated (P).
          • 1996 Pub. L. 104-188 Pub. L. 104–188 added subpar. (O).

          [(P) Repealed. Pub. L. 115–141, div. U, title IV, § 401(b)(2), Mar. 23, 2018, 132 Stat. 1201.]

          Amended 1997, 2002, 2018
          • 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(2), struck out subpar. (P) which read as follows: “section 860K (relating to treatment of transfers of high-yield interests to disqualified holders),”.
          • 2002 Pub. L. 107-147 Pub. L. 107–147, § 415(a), which directed striking “and” at end of subpar. (P) and substituting “, and” for the period at the end of subpar. (Q), was executed to subpars. (P) and (Q) as redesignated by Pub. L. 105–34, § 213(e)(1), to reflect the probable intent of Congress. See 1997 Amendment notes below.
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), redesignated subpar. (P) as (Q).
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 1602(a)(1), added subpar. (P).

          (Q) section 220(f)(4) (relating to additional tax on Archer MSA distributions not used for qualified medical expenses),

          Amended 1997, 2000, 2002
          • 2002 Pub. L. 107-147 Pub. L. 107–147, § 415(a), which directed striking “and” at end of subpar. (P) and substituting “, and” for the period at the end of subpar. (Q), was executed to subpars. (P) and (Q) as redesignated by Pub. L. 105–34, § 213(e)(1), to reflect the probable intent of Congress. See 1997 Amendment notes below.
          • 2000 Pub. L. 106-554 Pub. L. 106–554 substituted “Archer MSA” for “medical savings account”.
          • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(e)(1), redesignated subpar. (P) as (Q).

          (R) section 138(c)(2) (relating to penalty for distributions from Medicare Advantage MSA not used for qualified medical expenses if minimum balance not maintained),

          Amended 2002, 2004
          • 2004 Pub. L. 108-311 Pub. L. 108–311, § 408(a)(5)(A), substituted “Medicare Advantage MSA” for “Medicare+Choice MSA”.
          • 2002 Pub. L. 107-147 Pub. L. 107–147, § 415(a), added subpar. (R).

          (S) sections 106(e)(3)(A)(ii), 223(b)(8)(B)(i)(II), and 408(d)(9)(D)(i)(II) (relating to certain failures to maintain high deductible health plan coverage),

          Amended 2004, 2007
          • 2007 Pub. L. 110-172 Pub. L. 110–172 added subpars. (S) and (T) and redesignated former subpars. (S) and (T) as (U) and (V), respectively.
          • 2004 Pub. L. 108-311 Pub. L. 108–311, § 401(a)(1), added subpar. (S).

          (T) section 170(o)(3)(B) (relating to recapture of certain deductions for fractional gifts),

          Amended 2005, 2007
          • 2007 Pub. L. 110-172 Pub. L. 110–172 added subpars. (S) and (T) and redesignated former subpars. (S) and (T) as (U) and (V), respectively.
          • 2005 Pub. L. 109-135 Pub. L. 109–135, § 403(hh)(1), added subpar. (T).

          (U) section 223(f)(4) (relating to additional tax on health savings account distributions not used for qualified medical expenses),

          Amended 2007
          • 2007 Pub. L. 110-172 Pub. L. 110–172 added subpars. (S) and (T) and redesignated former subpars. (S) and (T) as (U) and (V), respectively.

          (V) subsections (a)(1)(B)(i) and (b)(4)(A) of section 409A (relating to interest and additional tax with respect to certain deferred compensation),

          Amended 2007
          • 2007 Pub. L. 110-172 Pub. L. 110–172 added subpars. (S) and (T) and redesignated former subpars. (S) and (T) as (U) and (V), respectively.

          (W) section 36(f) (relating to recapture of homebuyer credit),

          Amended 2008

          (X) section 457A(c)(1)(B) (relating to determinability of amounts of compensation),

          Amended 2008

          (Y) section 529A(c)(3)(A) (relating to additional tax on ABLE account distributions not used for qualified disability expenses), and

          Amended 2014

          (Z) section 24(j)(2) (relating to excess advance payments).

          Amended 2021

          (c) Tentative minimum tax For purposes of this part, the term “tentative minimum tax” means the amount determined under section 55(b)(1).

          Amended 1986
          • 1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(1)(C), amended subsec. (c) generally, substituting provisions relating to tentative minimum tax for provisions referring to section 55(c) of this title for similar rule for alternative minimum tax for taxpayers other than corporations.