{
  "slug": "amt-iso-exercise",
  "title": "AMT on ISO Exercise Calculator",
  "heading": "AMT Exposure from ISO Exercise Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/amt-iso-exercise",
  "summary": "Estimate the Alternative Minimum Tax hit from exercising incentive stock options.",
  "description": "Exercising incentive stock options (ISOs) and holding the shares (rather than immediately selling) creates no regular-tax income, but the 'bargain element' — the spread between the exercise price and the fair market value at exercise — counts as income for Alternative Minimum Tax purposes. If that AMT income pushes your AMT liability above what you'd owe under the regular tax system, you pay the difference as AMT, potentially tens of thousands of dollars in cash tax on paper gains you haven't actually sold yet. This calculator estimates your AMT income addition from an ISO exercise, applies the AMT exemption phase-out and 26%/28% AMT rate structure, and compares it against a rough regular-tax estimate so you can see whether — and by how much — the exercise triggers AMT this year.",
  "formula": "AMT income = regular taxable income + ISO bargain element (FMV − strike × shares) − AMT exemption (phased out above threshold). Tentative minimum tax = AMT income × 26% (up to $232,600 in 2024) or 28% above that. AMT owed = max(0, tentative minimum tax − regular tax).",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=amt-iso-exercise",
  "inputs": [
    {
      "id": "shares",
      "label": "ISO shares exercised",
      "kind": "number",
      "hint": null,
      "default": 5000,
      "unit": null,
      "min": 0,
      "max": null
    },
    {
      "id": "strikePrice",
      "label": "Strike price per share",
      "kind": "number",
      "hint": null,
      "default": 4,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "fmv",
      "label": "Fair market value per share at exercise",
      "kind": "number",
      "hint": null,
      "default": 24,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "regularTaxableIncome",
      "label": "Regular taxable income (before ISO)",
      "kind": "number",
      "hint": null,
      "default": 160000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "regularTaxEstimate",
      "label": "Estimated regular tax liability",
      "kind": "number",
      "hint": null,
      "default": 30000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "filingStatus",
      "label": "Filing status",
      "kind": "select",
      "hint": null,
      "default": "single",
      "options": [
        {
          "value": "single",
          "label": "Single"
        },
        {
          "value": "mfj",
          "label": "Married filing jointly"
        }
      ]
    }
  ],
  "outputs": [
    {
      "id": "amtOwed",
      "label": "Estimated additional AMT owed",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "bargainElement",
      "label": "ISO bargain element (AMT income added)",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "tentativeMinTax",
      "label": "Tentative minimum tax",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "effectiveExemption",
      "label": "AMT exemption after phase-out",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "ISO shares exercised: 5000",
      "Strike price per share: 4 $",
      "Fair market value per share at exercise: 24 $",
      "Regular taxable income (before ISO): 160000 $",
      "Estimated regular tax liability: 30000 $",
      "Filing status: Single"
    ],
    "outputs": [
      "Estimated additional AMT owed: $15,318",
      "ISO bargain element (AMT income added): $100,000",
      "Tentative minimum tax: $45,318",
      "AMT exemption after phase-out: $85,700"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter iso shares exercised.",
      "Enter strike price per share ($).",
      "Enter fair market value per share at exercise ($).",
      "Enter regular taxable income (before iso) ($).",
      "Enter estimated regular tax liability ($).",
      "Enter filing status.",
      "Read your estimated additional amt owed on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "shares": 3000,
        "strikePrice": 2.4,
        "fmv": 14.399999999999999,
        "regularTaxableIncome": 96000,
        "regularTaxEstimate": 18000,
        "filingStatus": "single"
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "shares": 5000,
        "strikePrice": 4,
        "fmv": 24,
        "regularTaxableIncome": 160000,
        "regularTaxEstimate": 30000,
        "filingStatus": "single"
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "shares": 8000,
        "strikePrice": 6.4,
        "fmv": 38.400000000000006,
        "regularTaxableIncome": 256000,
        "regularTaxEstimate": 48000,
        "filingStatus": "single"
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Can I get the AMT I paid back later?",
      "a": "Often yes, through the AMT credit. If you pay AMT in the exercise year because of the ISO bargain element, and in a later year your regular tax exceeds your tentative minimum tax, you can claim a credit against that excess, effectively recovering some or all of the AMT paid over time — though it may take several years."
    },
    {
      "q": "How do I avoid a big AMT surprise?",
      "a": "Exercise ISOs gradually across multiple years rather than all at once, model the AMT impact before December 31 (since AMT is calculated on the calendar year), and consider exercising early in a year when the stock price is low relative to what you expect later, since AMT is based on the spread at exercise, not at sale."
    },
    {
      "q": "What if I exercise and sell in the same calendar year?",
      "a": "A 'disqualifying disposition' in the same year generally removes the AMT preference item — the sale converts the ISO into ordinary income treatment for regular tax, which usually eliminates the separate AMT problem, though you lose the potential long-term capital gains treatment on the gain."
    },
    {
      "q": "Does this calculator give an exact AMT number?",
      "a": "No — it's a simplified estimate covering the core mechanics (exemption phase-out, 26%/28% rate brackets). Real AMT calculations include other preference items (state tax addback, certain deductions) via Form 6251. Use this to gauge magnitude, then confirm with a tax professional before exercising a large ISO grant."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/nua-company-stock",
    "https://www.revenuelab.fyi/toolbox/rsu-vest-withholding-gap",
    "https://www.revenuelab.fyi/toolbox/espp-discount-return"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — AMT on ISO Exercise Calculator (https://www.revenuelab.fyi/toolbox/amt-iso-exercise)"
}