HenryCalc

AMT / ISO calculator

Estimate alternative minimum tax before you exercise your incentive stock options.

Bargain element (added to AMT income)$100,000
Regular federal tax$36,734
Tentative minimum tax$54,574
Estimated AMT due on exercise$17,840

Why ISOs and AMT collide

Incentive stock options (ISOs) get favorable tax treatment, but there is a trap. When you exercise and hold past the end of the year, the difference between the fair market value and your strike price - the bargain element - does not show up on your regular tax return, but it is added to your income under the parallel alternative minimum tax (AMT) system.

If the AMT you calculate ends up higher than your regular tax, you pay the difference. That can mean a large, surprising bill in a year when you have not actually sold any shares or received any cash.

What this calculator estimates

Enter your strike price, the current fair market value, the number of shares you plan to exercise, your other income, and your filing status. The tool computes:

  • The bargain element added to your AMT income
  • Your approximate regular federal tax
  • Your tentative minimum tax after the AMT exemption (and its phaseout for high incomes)
  • The estimated AMT due on the exercise - the amount by which AMT exceeds regular tax

Using the result

The most useful number is your AMT crossover - how many shares you can exercise before AMT kicks in. Lower the share count until the AMT due drops to zero and you have found the amount you can exercise “for free” this year. Spreading exercises across multiple tax years is one of the most common ways high earners manage the bill.

This is a simplified federal model. State AMT, prior credits, and other preference items can change the result, so confirm the final number with a CPA before exercising a large block.

Frequently asked questions

When do ISOs trigger AMT?
Exercising incentive stock options and holding the shares past December 31 adds the bargain element (FMV minus strike, times shares) to your alternative minimum tax income. If your tentative minimum tax exceeds your regular tax, you owe the difference as AMT.
Can I avoid AMT on ISOs?
Common strategies include exercising fewer shares so the bargain element stays under your AMT crossover point, exercising early when FMV is close to strike, or doing a same-year sale (a disqualifying disposition) so the gain is taxed as ordinary income instead of as an AMT preference item.
Do I get the AMT back?
AMT paid on ISO exercises usually generates a minimum tax credit you can recover in future years when your regular tax exceeds your tentative minimum tax. It is a timing cost, not always a permanent one.

Last reviewed January 2026. This calculator provides general educational estimates based on the inputs you enter and simplified assumptions. It is not financial, tax, legal or investment advice, and figures may differ from your actual liability. Verify with a licensed CPA or financial advisor before acting.