AMT Calculator

Use the AMT Calculator when you have incentive stock options (ISOs) and need to decide how many shares to exercise this year without triggering the Alternative Minimum Tax, or to estimate the AMT bill if you do. It's also useful for comparing the tax impact of exercising under 2025 vs. 2026 tax law.

The calculator has four modes. Here's how to use each:

Mode 1: AMT Estimate

1. Enter your filing status and W-2 income.
2. Enter your ISO details: number of shares, strike price (the price you pay), and FMV (current fair market value per share). ISO rows support held exercises and same-day sales. NSO rows are modeled as exercises taxed as ordinary income.
3. The calculator shows your regular tax, tentative minimum tax, and any AMT owed.

Mode 2: Exercise Optimization

1. Same inputs as above, plus the total shares available.
2. The chart shows total tax as you exercise more shares, with the AMT threshold clearly marked.

Mode 3: AMT Credit Recovery

1. Enter your AMT paid and baseline wage growth rate.
2. Optionally add explicit income overrides or future ISO/NSO grants for any projection year you want to model directly.
3. The projection shows how the credit balance changes over time, including any future AMT generated by later exercises.

Mode 4: Strategy Planner

1. Choose a planning objective and planning horizon. The horizon controls how many projection years the planner can use when ranking exercise and sale schedules.
2. Enter pooled brokerage sale capacity by year, including estimated sale proceeds and realized gains.
3. Optionally set target net cash when the plan needs to fund a cash goal, or AMT budget to cap current-year AMT generated by the recommendation.
4. Review the recommended schedule, alternatives, and the ISO versus long-term gain sensitivity map.

Scenario: Single filer, $150,000 W-2 income, 1,000 ISOs with $10 strike price and $50 FMV.

1. The ISO spread is ($50 − $10) × 1,000 = $40,000. This is not taxed for regular tax but added to AMT income.
2. Regular taxable income: $150,000 − $15,000 (standard deduction) = $135,000. Regular tax: approximately $25,200.
3. AMT income: $135,000 + $40,000 (ISO spread) + SALT add-back = ~$175,000. After AMT exemption (~$88,100), AMT base: ~$86,900. Tentative minimum tax: ~$22,594 (at 26%).
4. Since regular tax ($25,200) exceeds tentative minimum tax ($22,594), no AMT is owed in this case.
5. The optimization chart would show you can exercise up to roughly 1,500–2,000 shares (depending on exact numbers) before AMT kicks in.

• AMT (Alternative Minimum Tax): a parallel tax system that adds back certain deductions and preference items. You owe AMT when your tentative minimum tax exceeds your regular tax. See the Glossary.
• ISO (Incentive Stock Option): a type of stock option where the spread at exercise is not taxed as ordinary income but is an AMT preference item. The spread = FMV − strike price.
• NSO (Non-Qualified Stock Option): the spread is taxed as ordinary income (W-2) at exercise for both regular and AMT purposes. NSOs do not create an AMT differential.
• FMV (Fair Market Value): the current market price of the stock. For private companies, this is typically the 409A valuation.
• Strike Price: the price at which you can buy shares under your option grant.

The exercise optimization chart shows how your total tax changes as you exercise more ISO shares. It identifies the exact threshold where AMT begins to apply, helping you decide how many shares to exercise in a given tax year.

• AMT Threshold: the number of ISO shares you can exercise before AMT exceeds your regular tax. Below this threshold, you pay no additional AMT.
• Marginal Tax Impact: above the threshold, each additional share exercised increases your tax bill by the AMT rate (26-28%) applied to the per-share spread.

AMT paid on deferral items (like ISO exercises) generates a credit that can offset your regular tax in future years. The credit is usable in any year where your regular tax exceeds your tentative minimum tax.

By default, the recovery projection uses your specified baseline wage growth rate and assumes no future grants. You can override any future year with explicit income inputs and add future ISO/NSO exercises when you need a more exact projection.

The strategy planner uses the same AMT credit recovery logic when it reports net cash after tax, so recovered credit increases projected cash in the year it is used.

The strategy planner returns a recommended schedule, a small set of alternatives, a frontier scatter plot, and a sensitivity heatmap.

• Strategy Recommendation: the highest-ranked schedule under your selected objective. Year rows show exercise cost, sale proceeds, incremental tax, net cash, AMT generated, and AMT credit usage. Net cash after tax includes any AMT credit used in that year.
• Strategy Frontier: plots current-year AMT on the x-axis and net cash after tax on the y-axis. Marker color shows projected AMT credit recovered, and marker size reflects current-year ISO shares exercised.
• ISO vs LT Gain Sensitivity: plots current-year ISO shares exercised on the x-axis and current-year long-term realized gains on the y-axis. Each heatmap cell shows the resulting current-year AMT for that combination. Hover details also show projected AMT credit recovered and net cash after tax for that sampled combination.
• Brokerage Sale Capacity: this is aggregate capacity, not lot-level optimization. Enter proceeds and realized gains by year; realized gains cannot exceed proceeds for a given row.