ISO AMT Calculator (2026)

Incentive stock options (ISOs) are the most tax-advantaged equity instrument available to employees — but exercise too many in a single year and you trigger the Alternative Minimum Tax (AMT) even if you haven't sold a share. This calculator finds your 2026 crossover point: the maximum number of ISO shares you can exercise without owing any AMT.

How the AMT crossover works

When you exercise an ISO, the spread between the exercise price and the current fair market value is an AMT preference item — not taxable under regular income tax, but counted toward Alternative Minimum Tax Income (AMTI). The AMT runs in parallel with regular tax; you owe whichever is higher.

The 2026 AMT exemptions ($90,100 for single filers, $140,200 for MFJ) mean you absorb a significant ISO spread before AMT bites. But once AMTI exceeds the phase-out start ($500,000 single / $1,000,000 MFJ), the exemption erodes at 50 cents per dollar, making the effective AMT rate on incremental AMTI higher than the headline 26%–28%.

Source: IRS Rev. Proc. 2025-32 (adjusted for OBBBA); Tax Foundation 2026 brackets.

The AMT credit: deferral, not permanent cost

AMT paid on ISO exercises is not lost. It generates a minimum tax credit (MTC) carried forward indefinitely on Form 8801. In future years when your regular tax exceeds your tentative minimum tax — typically after you sell the ISO shares (converting the preference item back into regular income), or in a year with lower income — the MTC reduces your regular tax dollar for dollar.

The practical implication: AMT on ISOs is often a timing cost, not a permanent one. But "often" is not "always." If the stock price falls significantly after you exercise, you may owe AMT on a phantom gain that has evaporated. The calculator's AMT credit column reflects the maximum recoverable amount, assuming the stock price holds.

Strategies around the crossover

• Exercise up to the crossover in year 1. Captures ISO tax treatment on that tranche with zero AMT cost. The remaining shares can be staggered across future tax years.
• Gap-year exercises. If you have a year with unusually low income (career break, post-departure sabbatical, year after a large RSU cliff ends), the crossover point shifts dramatically upward. Model each year separately.
• Early exercise + 83(b). Pre-vesting exercise when FMV ≈ strike produces $0 AMT preference (bargain element is zero). Start the LTCG and QSBS holding periods immediately. See our 83(b) election guide.
• QSBS stacking. If shares qualify under IRC §1202, the gain exclusion (up to $15M under post-OBBBA rules) eliminates the long-term capital gain on qualifying disposition — the key reason to hold through the qualifying periods even if AMT is owed. See our QSBS planning guide.
• CA AMT note. California has a separate state AMT at a 7% rate with its own exemption ($40,250 single / $80,500 MFJ). CA also does not conform to the federal ISO preferential treatment in all situations. CA residents should run this analysis including state AMT exposure.

What this calculator does not model

• State AMT — California and a few other states impose their own parallel AMT on ISO exercises.
• NIIT — the 3.8% Net Investment Income Tax applies at sale, not at exercise. Not included here.
• ISO $100,000 annual limit — under IRC §422(d), ISOs can only qualify for ISO treatment to the extent the aggregate FMV of shares first exercisable in a calendar year does not exceed $100,000. Grants above this become NQOs for tax purposes. The calculator assumes all shares modeled qualify as ISOs.
• Stock price risk between exercise and sale — the AMT credit recovery depends on having future regular tax liability. If you exercise and the stock goes to zero, the AMT credit may never be fully recoverable.
• Itemized deductions — the calculator uses the standard deduction for regular tax. If you itemize, your regular taxable income is lower, which slightly increases the number of ISO shares you can exercise before AMT exceeds regular tax. Enter your itemized deductions separately and reduce the AGI input by the excess over the standard deduction to approximate.