ISO Exercise & AMT Calculator
Alternative Minimum Tax exposure from exercising and holding incentive stock options past year-end.
Your ISO Exercise & AMT Calculator Result
Generated from the inputs below — a record you can revisit, or share with anyone helping you plan.
Your detailsInput Parameters
ISO Exercise
Current 409A valuation (private company) or market price (public) per share.
This is the single most important input. Hold past December 31 and the bargain element is an AMT preference item, not ordinary income. Sell in the same year (a 'disqualifying disposition') and it's ordinary income instead -- no AMT preference at all. This calculator only applies AMT to shares held past year-end.
Your Income
W-2 wages, other income, before deductions -- from your Form 1040.
State/local tax deduction addback, private activity bond interest, and other Form 6251 preference items, if any. Leave at $0 if you only have the ISO exercise to model.
Your Tentative Minimum Tax ($55,874) exceeds your regular tax ($31,934) -- the excess is owed on top of your regular tax bill.
5,000 shares × ($30 FMV − $5 strike). Included in AMTI since you're holding past year-end.
AGI plus the ISO preference (if held) and any other AMT adjustments -- the standard deduction is never subtracted here.
Full 2026 exemption for your filing status -- AMTI is under the $500,000 phase-out threshold.
26% on the first $244,500 of AMT base, 28% above that.
2026 federal brackets on AGI less the standard deduction -- excludes FICA, state tax, and credits.
Analysis
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Open calculatorWhy Holding ISOs Can Trigger a Tax You've Never Owed Before
Exercising a Non-Qualified Stock Option (NSO) creates ordinary income immediately. Exercising an Incentive Stock Option (ISO) and holding the shares past December 31 does not -- the bargain element (fair market value minus strike price) isn't taxed as wages at all. Instead, it's an AMT preference item: it gets added into a parallel tax calculation, the Alternative Minimum Tax, which you pay if it comes out higher than your regular tax.
This is why a large ISO exercise can produce a real tax bill even though no cash actually changed hands from a sale -- a well-known trap known as "phantom income" or the "AMT crossover." You owe tax on paper gains you haven't realized in cash yet.
If you're selling shares this same calendar year instead, none of this applies -- toggle "Selling Any Shares This Same Calendar Year?" above, and the bargain element is instead ordinary income, taxed like an NSO exercise.
How the AMT Comparison Actually Works
AMTI = AGI + Bargain Element (if held) + Other Preferences
Exemption (after phase-out) = max(0, Exemption − 50% × max(0, AMTI − Phase-out Start))
AMT Base = max(0, AMTI − Exemption)
Tentative Minimum Tax = 26% × min(AMT Base, $244,500) + 28% × max(0, AMT Base − $244,500)
AMT Owed = max(0, Tentative Minimum Tax − Regular Tax)
Regular tax is computed on your AGI less the 2026 standard deduction, using the same federal brackets as the Income Tax Calculator. AMT disallows the standard deduction entirely, which is why AMTI adds it back before applying the AMT's own, separate exemption.
Frequently Asked Questions
$90,100 for single and Head of Household filers, $140,200 for married filing jointly. The exemption phases out at 50 cents per dollar once AMTI exceeds $500,000 (single/HOH) or $1,000,000 (MFJ) -- both figures reset lower and the phase-out rate doubled starting 2026 under the One Big Beautiful Bill Act.
No AMT preference applies to a same-year sale (a "disqualifying disposition") -- the bargain element becomes ordinary income instead, taxed the same way an NSO exercise is. AMT exposure only arises when you exercise and hold shares past December 31.
Often yes, through the Minimum Tax Credit (Form 8801) -- AMT paid specifically because of "deferral" preference items like the ISO bargain element can generally be credited against regular tax in future years, once your regular tax exceeds your AMT. It isn't automatic and can take several years to fully recover; it isn't modeled by this calculator.
AMT applies a 26% rate to AMT base up to $244,500, and 28% above that, for 2026 (all filing statuses except married filing separately, which uses half that figure). This is a flat two-rate system, unlike the seven graduated regular-tax brackets.