Exercising incentive stock options adds the exercise spread as an AMT preference item, which can trigger real extra tax once carried through the full AMT exemption and rate structure.
How it works
Regular taxable income plus the ISO spread gives AMTI. The 2026 exemption phases out above a threshold, and the resulting AMT base is taxed at 26% up to a breakpoint and 28% above it — the excess of that tentative minimum tax over regular tax already owed is the actual AMT.
What this does not include
This does not include the AMT credit carryforward available in future years for AMT paid on ISO exercises, or state-level AMT rules, both of which can meaningfully offset the long-run cost shown here.
How to use this calculator
- Enter regular taxable income, the ISO exercise spread, and regular tax already owed.
Frequently asked questions
How is this different from the NSO vs. ISO comparison calculator?
That calculator states the ISO spread as an AMT preference item without computing the actual tax; this one carries that spread through the real AMT exemption, phase-out, and bracket structure to estimate dollars owed.
Do I get the AMT I pay back eventually?
Often yes, via the AMT credit, which can offset regular tax in future years once regular tax exceeds tentative minimum tax — though this calculator doesn’t model that carryforward.
Can exercising fewer shares avoid triggering AMT?
Often yes — many ISO holders exercise in smaller batches across multiple years specifically to stay under the AMT exemption phase-out threshold.
