AMT Calculator

The Alternative Minimum Tax is a parallel tax system that recomputes your income with fewer deductions, applies its own 26/28% rates, and charges you whichever total is higher. Post-2018 reforms shrank it from a mass-market ambush (5M filers) to a specialist's tax (~200k) — but for one group it remains the defining event: employees exercising incentive stock options, whose paper gains are AMT income the year of exercise, cash or no cash. This calculator runs the 2025 computation and flags the ISO mechanics that create (and eventually refund) most real AMT.

The 2025 Parameters

What AMT Adds Back

• The ISO exercise spread — the big one: (market value − strike) × shares at exercise, even unsold.
• SALT deductions — state/local taxes deduct for regular tax but not AMT (with the raised $40k SALT cap, this trigger is back for high earners in high-tax states).
• Certain interest (private-activity muni bonds), depreciation adjustments, and other niche preferences.
• Notably NOT added back: the standard deduction era's structure means ordinary W-2 households essentially can't trigger AMT anymore.

The ISO Trap, and Its Three Escape Tools

Exercise ISOs on a startup's paper valuation and AMT taxes gains you cannot spend — the 2000-era horror stories (six-figure tax bills on worthless shares) came from exactly this. Modern practice uses three tools, all visible in this calculator:

1. The crossover exercise: each year, exercise only enough shares that tentative-minimum-tax still doesn't exceed regular tax — free ISO exercising, sized annually. (Iterate the ISO field until AMT owed reads $0: that's your crossover.)
2. The January exercise + escape hatch: exercising early in the year preserves the option to sell before December 31 if the stock tanks — a same-year disqualifying disposition erases the AMT preference entirely.
3. The AMT credit: ISO-driven AMT isn't lost — it becomes a credit against future years' regular tax (Form 8801), typically recovered when you finally sell the shares. AMT here is prepayment, not penalty — but only for those who track the credit.

How to Use the Calculator

1. Enter taxable income, any ISO exercise spread you're considering, and your regular tax (from the Refund Estimator).
2. Read the verdict and the computation table.
3. Planning ISOs? Iterate the spread field to find your crossover — the single most valuable number in equity-compensation planning.

Frequently Asked Questions

Who actually pays AMT now?

Mostly ISO exercisers and incomes in the exemption-phaseout band ($600k–$1.9M) with big add-back items. The middle-class AMT of the 2000s is gone; if you have no ISOs and earn under ~$500k, the answer is almost certainly 'not you.'

I exercised ISOs and didn't sell — I really owe tax on paper gains?

Yes — the exercise spread is AMT income that year. The mitigations: size exercises to your crossover, exercise in January to keep the same-year-sale escape, and claim the AMT credit as you sell in later years. Never exercise a large ISO block without running this math first.

What is the AMT credit and how do I get it back?

AMT paid on timing items (ISOs mainly) carries forward as a credit against future regular tax — claimed on Form 8801 each year until exhausted. People abandon real money by forgetting it; your tax software only knows if you tell it.

Do capital gains get taxed at 26/28% under AMT?

No — long-term gains keep their 15/20% rates in both systems. But big gains raise AMTI, phasing out your exemption, which indirectly taxes other income more — the 'AMT bump' high sellers notice.

Does the new $40k SALT cap bring AMT back?

For some: bigger SALT deductions widen the regular-vs-AMT gap since AMT disallows SALT. High earners in CA/NY/NJ claiming the full $40k should re-check — this calculator's income field captures the effect if you enter taxable income after SALT.

NSOs or ISOs — which avoids this?

NSOs are taxed as wages at exercise (no AMT, but immediate ordinary rates + payroll tax). ISOs trade AMT complexity for the shot at all-long-term-gains treatment. Neither is 'better' — the crossover exercise strategy is what makes ISOs worth their paperwork.

Is my information private?

Yes — every figure computes locally in your browser.

For most people AMT is a checkbox their software handles; for anyone holding ISOs it's the planning axis of their financial year. Find your crossover before you exercise, keep the January escape open, and track the credit until it's fully home.