ISO exercise details
Excluding the ISO exercise income
e.g. private activity bond interest, certain depreciation adjustments
Used to estimate SALT deduction added back for AMTI
AMT calculation
| W-2 salary | $180,000 |
| Standard deduction (Single) | $16,100 |
| Regular taxable income | $163,900 |
| Regular tax (2026 brackets) | $31,934 |
| ISO bargain element | $100,000 |
| Other AMT preferences | $0 |
| SALT deduction added back | $0 |
| AMTI (Alternative Minimum Taxable Income) | $263,900 |
| AMT exemption (Single) | $90,100 |
| Phaseout reduction (50¢ per $1 above $500,000) | $0 |
| AMT exemption after phaseout | $90,100 |
| AMT taxable income | $173,800 |
| Tentative minimum tax (26% up to $244,500 + 28% above) | $45,188 |
| AMT owed (TMT − regular tax) | $13,254 |
| Total tax (regular + AMT) | $45,188 |
• 2026 AMT exemption: $90,100 (Single) / $140,200 (MFJ)
• OBBBA phaseout: 50¢ per dollar above $500,000 (Single) / $1,000,000 (MFJ)
• AMT rates: 26% on first $244,500, 28% above
• Assumes standard deduction (itemizing may change results)
• SALT deduction estimated from state tax rate on salary
What is How to Use the ISO AMT Calculator?
When you exercise Incentive Stock Options (ISOs) and hold the shares, the bargain element (FMV minus strike price) is added to your Alternative Minimum Taxable Income. This can trigger AMT — a parallel tax system that may result in a significant tax bill on paper gains.
How to Use
- Enter the number of ISO shares you plan to exercise
- Input your strike price and the current FMV per share
- Enter your annual W-2 salary (excluding the ISO exercise)
- Select your filing status
- Add any other AMT preference items if applicable
- Review whether AMT applies and how much you would owe
Why Use This Tool?
Tips & Best Practices
- The 2026 OBBBA accelerated AMT exemption phaseout to 50 cents per dollar (up from 25 cents), increasing AMT exposure for high earners
- AMT paid on ISO exercises generates a credit (Form 8801) that you can recover when your regular tax exceeds AMT in future years
- Exercise and sell in the same year (disqualifying disposition) eliminates the AMT preference item but taxes the spread as ordinary income
- Coordinate ISO exercises with high-income years when your regular tax already exceeds AMT
- Consider exercising early in the year to give yourself time to sell before year-end if AMT is too high
Frequently Asked Questions
When does exercising ISOs trigger AMT?
AMT is triggered when you exercise ISOs and hold the shares. The bargain element (FMV at exercise minus strike price times shares) is added to your AMT income. If your tentative minimum tax exceeds your regular tax, you owe AMT on the difference.
What is the AMT crossover point?
The AMT crossover point is the maximum ISO bargain element you can exercise in a year without triggering AMT. It equals the available AMT headroom divided by the effective AMT rate on the bargain element.
Can I recover AMT paid on ISO exercises?
Yes. AMT paid due to ISO exercises generates an AMT credit (Form 8801) that carries forward indefinitely. In future years when your regular tax exceeds AMT, you can use the credit to reduce your regular tax.
What are the 2026 AMT exemption amounts?
For 2026, the AMT exemption is $90,100 for single filers and $140,200 for married filing jointly. The exemption phases out at higher incomes under OBBBA rules.
How do I avoid AMT when exercising ISOs?
Exercise only enough shares to stay below your AMT crossover point, coordinate exercises with high-income years, or exercise and sell in the same year (disqualifying disposition) which eliminates the AMT preference item.