When you exercise ISOs (incentive stock options), the spread between strike price and FMV becomes a preference item for AMT — even though you haven't sold the shares. The IRS taxes the paper gain.
This calculator estimates AMT owed using simplified 2024 US federal AMT rules — exemption ($85,700 single / $133,300 married, with phase-outs above $609K/$1.2M income), 26% rate up to ~$232K of AMTI, 28% above.
AMT is the single biggest tax surprise for early-stage employees and founders. A million-dollar paper gain at exercise creates a hundreds-of-thousands-of-dollars tax bill — payable in cash, regardless of whether you've actually sold anything.
The good news: AMT paid generates a credit recoverable in future years when your regular tax exceeds AMT. But you need the cash flow to front it.
The bad news: if the company doesn't exit and shares become worthless, the AMT credit is hard to recover and you've essentially paid tax on phantom income. This is why "early exercise at low FMV" is the preferred strategy whenever possible.
From your equity portal or HR. Don't guess — the actual 409A determines the AMT preference.
W-2, 1099, business income, RSU vests. Higher other income reduces your AMT exemption.
Sometimes exercising 50% now and 50% later spreads the AMT across years and reduces total tax.
Real AMT calculations have many edge cases. This calculator is an estimate, not advice.