Equity exercise · Alternative minimum tax
ISO AMT Calculator
Screen an incentive stock option exercise for 2026 AMT exposure using shares, strike price, exercise-date fair market value, filing status, other AMTI, and regular federal tax liability.
Quick estimate
Estimate ISO exercise AMT exposure
Estimated ISO-related additional federal AMT
$42,882$200,000 ISO bargain-element adjustmentOther AMTI
$150,000ISO adjustment
$200,000A federal screening estimate, not a complete Form 6251 or state return. Capital-gain calculations, every AMT adjustment, credits, prior-year AMT credit, same-year sale details, and state AMT amounts are outside the numeric result.
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How this calculator works
Exercising an incentive stock option generally creates no regular federal income at exercise, but the spread between fair market value and exercise price is usually an AMT adjustment when the shares are retained beyond the exercise year.
2026 exemption and phaseout
The model adds the ISO adjustment to other alternative minimum taxable income, applies the 2026 exemption—$90,100 for unmarried filers, $140,200 joint, or $70,100 MFS—and reduces that exemption by 50 cents for every dollar of AMTI above the applicable phaseout threshold of $500,000, or $1,000,000 for joint filers.
Tentative minimum tax uses two rates
After exemption, AMT taxable income is taxed at 26% through $244,500 for most filers and 28% above it; the breakpoint is $122,250 for MFS. The calculator compares tentative minimum tax with entered regular tax liability and isolates the increase associated with the ISO adjustment.
Same-year disposition changes the exercise adjustment
If ISO shares are sold in the same tax year they are exercised, Form 6251 instructions generally say regular and AMT treatment is the same and no exercise adjustment is required. The sale still needs disqualifying-disposition and capital-gain analysis.
Retained ISO shares generally have a higher AMT basis by the adjustment amount. Preserve Form 3921 and exercise records to calculate a later AMT disposition adjustment and possible minimum tax credit.
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Worked example
Exercising 10,000 ISOs at a $10 strike when fair market value is $30 costs $100,000 and creates a $200,000 AMT adjustment if the shares are retained.
For a single filer with $150,000 of other AMTI, the full $90,100 exemption remains under the 2026 $500,000 phaseout threshold. Tentative minimum tax is then compared with regular tax.
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Questions people ask
Do I owe tax when I exercise ISOs?
Regular federal income tax is generally not recognized at a qualifying ISO exercise, but the bargain element may create AMT.
What price should I use as FMV?
Use the exercise-date fair market value reported or determined under the plan and Form 3921, considering any applicable restrictions under the tax rules.
What happens if I sell in the same year?
The exercise adjustment is generally removed, but ordinary income and capital gain or loss from a disqualifying disposition still require calculation.
Can AMT be recovered later?
Some prior-year AMT may generate a minimum tax credit, subject to Form 8801 rules. This calculator does not project the credit.
Does the calculator include state AMT?
No. State treatment varies and can create an additional cash requirement.
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Sources and model basis
This calculator is for tax year 2026 — the return filed in early 2027. Rates, brackets, deductions and limits are the ones in force for 2026, including changes enacted during 2026 that apply retroactively to the whole year. It does not estimate any other year.
Published rules and formulas are linked below. Values supplied by the visitor remain scenario inputs, not factual claims.
- IRS Form 6251 instructionsISO exercise adjustment, same-year sale, and AMT basis rules
- IRS Revenue Procedure 2025-32Official 2026 AMT exemptions, phaseouts, and rate breakpoints
- IRS Topic 427: Stock optionsISO reporting overview and Form 3921