ISO AMT Calculator
Enter an incentive stock option exercise to see the AMT it adds under the 2026 rules, the most shares you could exercise this year with no AMT, the credit it creates, and how much of that credit comes back in later years.
Federal rules for tax year 2026, including the AMT changes in the 2025 tax law. Everything runs in your browser; nothing you enter is sent anywhere. For education only, not tax or investment advice.
The exercise in 2026
Per share
Fair market value per share (409A value if private)
For the credit; today's price if unsure
Your year
For the year, on the return
Exercising and holding past 31 December adds AMT of
$100,386
The $400,000 spread is income for the AMT, though not for regular tax. $100,386 of it comes back as a credit in later years. You could exercise 857 shares this year with no AMT at all.
Spread at exercise
$400,000
AMT income only
Regular tax
$37,468
unchanged by the exercise
Tentative minimum tax
$137,854
exemption $140,200
AMT due
$100,386
paid with the 2026 return
Credit created
$100,386
Form 8801, carried forward
Shares with no AMT
857
of 10,000
Getting the AMT back
- In a year like this one without exercising, you can use about $8,920 of the credit, so about 12 years to use it all.
- Sell the shares in a qualifying sale (more than 2 years after grant and 1 year after exercise) at $45, and that year you can use $69,125, because AMT measures your gain from the higher AMT basis of $45 a share. $31,261 would still carry forward.
Exercise and sell in the same year instead
A sale in 2026 is a disqualifying disposition: no AMT, but the $400,000 spread is taxed as wages, adding about $116,301 of federal tax this year, with no credit to recover.
How this is worked out. AMT income is your taxable income with the standard deduction added back, plus the ISO spread if you keep the shares past 31 December. The 2026 exemption is $140,200, shrinking by 50 cents per dollar above $1,000,000; the rest is taxed at 26%, and 28% above $244,500. You pay whichever is higher, regular tax or this minimum tax.
Assumes the standard deduction and no other AMT items; itemized state and local taxes would add to AMT income. Options above $100,000 of grant-date value first exercisable in a year are treated as non-qualified and are not covered. State AMT (such as California's) and the 3.8% NIIT are not included. Credit recovery is estimated at 2026 rates and your current income.
No income tax, but AMT income
The spread at exercise is not regular income, but it is AMT income if you hold the shares past year end. That is how an exercise with no cash gain can produce a five- or six-figure tax bill.
A harsher AMT from 2026
The 2025 tax law cut the phase-out start to $1,000,000 joint ($500,000 single) and doubled the phase-out speed to 50%. Inside that band AMT income is taxed at an effective 42%.
The AMT comes back, slowly
AMT from ISOs becomes a credit on Form 8801 that never expires. You can use it only when your regular tax is above your minimum tax, which happens most in the year you sell the shares.
Exercise in slices
Exercising up to the AMT-free share count each year, often early in January, spreads the spread across years and can avoid AMT altogether.
Frequently asked questions
Why does exercising ISOs trigger AMT?
Exercising an incentive stock option creates no regular income, but the spread between the price on the exercise date and your strike price is income for the alternative minimum tax if you still hold the shares on 31 December. If that pushes your tentative minimum tax above your regular tax, you pay the difference as AMT with that year's return.
What are the AMT exemption and rates for 2026?
The exemption is $90,100 single and $140,200 married filing jointly. From 2026 it shrinks by 50 cents for every dollar of AMT income above $500,000 single or $1,000,000 joint, so it is gone at $680,200 and $1,280,400. AMT income above the exemption is taxed at 26%, and 28% above $244,500. Inside the phase-out band the effective rate is 42%.
Do I get AMT from ISOs back?
Usually, as the minimum tax credit on Form 8801. AMT caused by an ISO exercise is a timing difference, so it creates a credit you carry forward with no expiry. Each later year you can use the amount by which your regular tax exceeds your tentative minimum tax. That is often small in an ordinary year, but large in the year you sell the shares in a qualifying sale, because AMT then measures your gain from the higher AMT basis.
How many ISO shares can I exercise without paying AMT?
As many as keep your tentative minimum tax at or below your regular tax. The calculator finds that number for your income: each share's spread adds to AMT income, and the AMT starts once 26% of AMT income above the exemption passes your regular tax.
What if I sell the ISO shares in the same year I exercise?
That is a disqualifying disposition. There is no AMT on those shares, but the spread at exercise (or your actual gain, if smaller) is taxed as ordinary wages that year, and there is no credit to recover later. It trades a possibly refundable AMT for a definite ordinary tax.
What is the $100,000 ISO limit?
Options are treated as incentive stock options only up to $100,000 of grant-date value becoming exercisable for the first time in a calendar year. Anything above that is a non-qualified option, taxed as wages when exercised. Check your grant documents; this calculator assumes all the shares are ISOs.
Sources and references
Disclaimer: This calculator is for educational purposes only and does not constitute tax or investment advice. It assumes the standard deduction and no other AMT items, leaves out state AMT and the 3.8% NIIT, and estimates credit recovery at 2026 rates. Confirm with a tax professional before exercising.
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