ISO AMT Calculator (2026) – Incentive Stock Options
Estimate AMT from exercising ISOs in 2026. Enter shares, strike, FMV, income and see estimated AMTI, exemption and tentative minimum tax.
Last updated: April 2026
What is the ISO AMT Calculator?
The ISO AMT Calculator helps estimate the Alternative Minimum Tax (AMT) impact when you exercise Incentive Stock Options and hold the shares. The difference between fair market value (FMV) at exercise and the strike price—known as the bargain element—counts as an AMT preference item and may increase your AMTI for the exercise year.
This tool uses simplified current-year assumptions for AMT exemption and thresholds and applies the 26%/28% AMT rates. You can override defaults to match your filing status and income situation.
How to use this calculator
- 1Enter ISO details — Input number of shares, strike (exercise) price, and FMV at exercise.
- 2Enter your income & regular tax — Add regular taxable income and your regular tax liability for the year.
- 3Adjust AMT parameters — Optionally override AMT exemption and 28% threshold for 2025.
- 4Review results — See bargain element, AMTI, tentative minimum tax, and estimated AMT owed.
Formula & example
AMTI = Regular Taxable Income + Bargain Element − AMT Exemption; TMT = 26%/28% on AMTI after exemption; AMT Owed = max(0, TMT − Regular Tax)
Example (2026):
- Shares: 1,000; Strike: $5; FMV at Exercise: $25 ⇒ Bargain Element = $20,000
- Regular Taxable Income: $120,000; Regular Tax: $18,000
- AMT Exemption: $135,000; 28% threshold: $235,000
Step: AMTI = 120,000 + 20,000 = $140,000; After exemption = $5,000
Step: TMT = 26% × $5,000 = $1,300
Result: AMT Owed = max(0, 1,300 − 18,000) = $0
Benefits
Plan ISO exercises
Estimate AMT impact before exercising to avoid unexpected tax bills.
Adjust assumptions
Override exemption/threshold to match filing status and current IRS values.
Compare scenarios
Test different share counts or FMVs to plan multi-tranche exercises.
Use cases
Pre-exercise planning
Model potential AMT before exercising a large ISO grant.
Year-end estimate
Estimate AMT after several exercises during the year.
Advisor discussion
Bring structured numbers to your CPA or financial planner.
Frequently asked questions
What is AMT on ISO exercises?+
When you exercise Incentive Stock Options (ISO) and hold the shares, the bargain element (FMV − strike) is an AMT preference item. It increases your Alternative Minimum Taxable Income (AMTI), which may trigger AMT in the exercise year.
How is the bargain element calculated?+
Bargain element = (Fair Market Value at exercise − Strike price) × Number of shares exercised.
What rates does AMT use?+
AMT applies 26% up to a threshold and 28% above the threshold. An AMT exemption also reduces AMTI. This tool approximates 2025 values and lets you override them.
Will I get AMT credit later?+
Possibly. If you paid AMT due to ISO exercise and later sell in a disqualifying disposition or your regular tax exceeds AMT in future years, you may be able to claim the AMT credit. This tool does not compute AMT credit.
Is this legal or tax advice?+
No. This is an educational tool with simplified assumptions. Consult a qualified tax professional for advice specific to your situation.
Related articles
Understanding ISO Taxes: AMT, Bargain Element and Holding Periods
Learn how ISO exercises affect AMT and what to consider before exercising.
AMT Credit: How It Works and When You Can Use It
Overview of AMT credit mechanics and eligibility.
Equity Compensation 101: ISOs vs NSOs vs RSUs
Compare key tax differences across equity types.