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Salary & HRequityUnited States only

Stock Option Exercise & AMT Calculator

What exercising incentive stock options costs, including the AMT that catches people who exercise and hold. The spread is invisible to regular tax and fully visible to the AMT, which is why a bill arrives for shares that were never sold.

Also called: iso amt calculator, incentive stock option tax, amt calculator for stock options.

$
$
$
Tax year
Extra tax from the AMT
$39,548.00

Exercising 10,000 options costs $20,000.00 in strike price and triggers $39,548.00 of AMT on a bargain element of $180,000.00. That is $59,548.00 of cash for shares you may not be able to sell. You could exercise about 1,743 options before any AMT is due.

Cash for the strike price
$20,000.00
Bargain element
$180,000.00
Total cash needed
$59,548.00
Options you could exercise with no AMT
1,743
Alternative minimum taxable income
$380,000.00
AMT exemption after phase-out
$90,100.00
Tentative minimum tax
$76,282.00
Regular tax
$36,734.00
AMT credit carried forward
$39,548.00
On the exemption
The exemption applies in full.
How this is calculated

Computed from the published rates for the tax year you selected, which is not necessarily the current year. A calculation, not tax advice, and it does not know anything about your circumstances beyond the figures entered.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Exercising an ISO is not a taxable event for regular tax, which is the whole advantage of an ISO over a non-qualified option. It is a preference item for the alternative minimum tax: the bargain element, the number of shares times the gap between the fair market value and your strike price, is added to your income for the AMT calculation only. Your tentative minimum tax is then worked out on that larger figure at 26% and 28%, after an exemption that phases out as income rises, and you pay whichever of the two taxes is higher. The AMT you pay becomes a credit against regular tax in later years, so in a liquid company it is often a timing cost. In a private one it is cash out of your pocket for shares you cannot sell, and if the valuation later falls the credit may take many years to recover.

the bargain element is added to income for the AMT only, and you pay the excess of the tentative minimum tax over the regular tax
AMTI
Income plus the bargain element (currency)
TMT
Tentative minimum tax (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

ten thousand options at an 18 dollar spread

Options exercised
10,000
Strike price
$2.00
Fair market value at exercise
$20.00
Your other income for the year
$200,000.00
Filing status
Single
Tax year
Tax year 2026

Extra tax from the AMT$39,548.00

Rev. Proc. 2025-32 s.2.10. AMTI is 200,000 + 180,000 = 380,000, below the 500,000 phase-out threshold, so the 90,100 exemption is whole. The base is 289,900: 244,500 at 26% is 63,570 and the remaining 45,400 at 28% is 12,712, so TMT is 76,282. Regular tax on 200,000 - 16,100 = 183,900 is 36,734 from the 2026 single schedule. The AMT is the 39,548 difference, and the crossover solves to 31,384.62 of bargain element, which is 1,743 shares at an 18 spread. All worked separately in Python.

Open this example

the same exercise a year earlier, under the old thresholds

Options exercised
10,000
Strike price
$2.00
Fair market value at exercise
$20.00
Your other income for the year
$200,000.00
Filing status
Single
Tax year
Tax year 2025

Extra tax from the AMT$39,883.00

Rev. Proc. 2024-40 s.2.11: the 2025 phase-out threshold is 626,350, so an AMTI of 380,000 is nowhere near it and the 88,100 exemption applies in full. The base is 291,900: 239,100 at 26% plus 52,800 at 28% is 76,950, against regular tax of 37,067 on 200,000 - 15,750. Resolving by the date the user picked is what makes a prior-year exercise reproducible.

Open this example

the phase-out is 50 percent in 2026, not 25

Options exercised
30,000
Strike price
$2.00
Fair market value at exercise
$20.00
Your other income for the year
$200,000.00
Filing status
Single
Tax year
Tax year 2026

Extra tax from the AMT$165,576.00

boundary: AMTI of 740,000 is 240,000 past the 500,000 threshold, and at the 2026 phase-out rate of 50 percent that removes the whole 90,100 exemption. At the 25 percent rate that applied through 2025 the same AMTI would still leave 30,100 of exemption standing, so a calculator carrying the old rate forward understates this bill by roughly 8,400.

Open this example

Method and limits

What it assumes

  • Wage income and the standard deduction only. The standard deduction is added back for the AMT, because it is not allowed there.
  • The options are held past year end. Selling in the same calendar year as the exercise is a disqualifying disposition, which removes the AMT preference and taxes the spread as ordinary income instead.
  • No other AMT preference items, and no state AMT.

What it deliberately does not model

  • Six states levy their own AMT, which this does not model.
  • Itemised deductions, ISO dispositions in prior years and existing AMT credits all change the answer and are not modelled.
  • This is a mechanical calculation, not advice on whether to exercise.

Sources

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why do I owe tax on shares I did not sell?
Because the alternative minimum tax treats the spread at exercise as income even though regular tax does not. That is the trade an ISO makes: no ordinary income at exercise, in exchange for the spread counting as an AMT preference item. If the company is private you may owe real money on a paper gain you cannot convert to cash.
How many options can I exercise without paying AMT?
Up to the point where your tentative minimum tax first exceeds your regular tax, which this page reports. Exercising up to that line each year and spreading a large grant across several years is the standard way to avoid the bill entirely.
Do I get the AMT back?
Usually, eventually. AMT paid on an ISO exercise becomes a minimum tax credit against regular tax in later years. Recovering it can take a long time, and if the shares later fall in value you can be left having paid tax on a gain that never existed.