Option Exercise and AMT Calculator
Exercising ISOs adds the spread between your 409A fair market value and your strike price to your AMT income, which can trigger tax even though you haven't sold. This calculator shows AMT owed, your regular tax, the AMT crossover ceiling, and total cash you need at exercise.
How to use this calculator
- Enter your options: Add option count, strike price, current 409A FMV, and option type (ISO or NSO).
- Enter your tax context: Select filing status, other W-2 income, and state of residence.
- Review the numbers: See exercise cost, bargain element, AMT liability, regular tax, and total cash needed.
- Check the crossover: Read the AMT-free ceiling — the largest number of ISO shares you can exercise this year before AMT triggers.
Assumptions
| Assumption | Value |
|---|
| AMT rates | 26% up to $244,000 AMTI, 28% above (2026 est.) |
| AMT exemption | $89,600 single / $139,350 MFJ (2026 est.), 25% phaseout |
| State AMT | Not modeled (a few states, notably CA, have their own) |
| Same-year sale | Not modeled — becomes a disqualifying disposition |
| AMT credit recovery | Not modeled |
Frequently asked questions
What is AMT and why does exercising ISOs trigger it?
The Alternative Minimum Tax is a parallel federal tax that adds back certain preference items. For ISOs, the spread between your 409A fair market value and your strike price is added to your AMT income at exercise, even though you haven't sold the shares.
What is the AMT crossover point?
It's the largest number of ISO shares you can exercise this year before your tentative AMT exceeds your regular tax. Exercising up to this point is 'AMT-free' for the current year.
How is exercising NSOs different from ISOs?
NSO spread is ordinary compensation income at exercise, taxed at your marginal rate with W-2 withholding. There is no AMT preference, but you'll owe federal, state, Social Security, and Medicare on the spread.
Can I recover AMT I pay?
Yes — AMT paid on ISO exercise generally becomes an AMT credit you can claim in future years when your regular tax exceeds your tentative AMT. This calculator does not model future credit recovery.
What is the 409A fair market value?
It's the appraised fair market value of your company's common stock, set by an independent 409A valuation. This is the FMV used to calculate the ISO bargain element at exercise.
Does this calculator include state AMT?
No. A few states (notably California) have their own AMT-like tax on ISO exercise. This tool shows federal AMT only. Confirm state impact with your tax preparer.
What if I early-exercise unvested ISOs and file an 83(b)?
Early exercise at grant, when FMV equals strike, creates zero bargain element and no AMT. Use the 83(b) Election Calculator to model that path.
Do I need cash for AMT at exercise?
Yes — AMT is due on your federal return for the year of exercise, whether or not you sold the shares. Plan total cash needed = strike cost + AMT + any state tax.
What happens if I sell the ISO shares the same year I exercise?
A same-year 'disqualifying disposition' converts the ISO into ordinary income treatment (like an NSO) and generally eliminates the AMT preference. Different math — model that separately.
Is this tax advice?
No. This tool is an illustrative planning estimate using 2026 estimated brackets and is not tax, legal, or investment advice.
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