Stock options calculator
Estimate exercise costs for incentive and nonqualified stock options, including a simplified alternative minimum tax calculation for ISOs.
For a single filer with $200,000 of other income, exercising 10,000 ISOs at a $2 strike and $20 fair market value creates a $180,000 spread. This simplified 2026 model estimates $39,548 of AMT, in addition to the $20,000 purchase cost, assuming the shares are held and no state tax.
409A price, or market price if public
Two years from grant and one year from exercise makes the whole gain long-term.
Exercising more than this triggers alternative minimum tax, even though you have sold nothing and received no cash.
Cash you hand over for the shares
An AMT preference item
Over and above your regular tax
10,000 shares at $40
39.2% of the gain
After the exercise cost and all tax
- Your regular tax
- $36,734
- AMT exemption at this income
- $90,100
- Income subject to AMT
- $289,900
- Tentative minimum tax
- $76,282
- AMT owed, the excess over regular tax
- $39,548
Holding long enough makes the whole $380,000 gain from the strike long-term. AMT paid here often generates a credit you can recover in later years, which this calculator does not model, so treat the AMT figure as a cash-flow cost rather than a permanent one.
Simplified 2026 estimate, not an exercise recommendation. Assumes ordinary other income, standard deductions and vested options. Excludes other AMT adjustments, minimum tax credits, Social Security tax on NSO wages, early exercise and 83(b) elections. Actual tax and the number of ISOs that avoid AMT depend on your complete return.
The AMT line moves with your salary
| Other income | ISOs before AMT | AMT on 10,000 ISOs | Tax on 10,000 NSOs |
|---|---|---|---|
| $150,000 | 1,957 | $37,640 | $58,130 |
| $200,000 | 1,743 | $39,548 | $63,630 |
| $300,000 | 2,827 | $36,148 | $67,230 |
| $500,000 | 3,737 | $47,348 | $67,696 |
A $2 strike worth $20, single filer, no state tax. Estimates exclude Social Security tax and other AMT adjustments. The threshold is not a safe exercise limit for a complete tax return.
Budget for exercise cost and tax separately
The strike price is cash paid to buy the shares. Tax is an additional expense, and private shares may not be sellable when the bill is due. Check the grant, exercise deadline, current valuation and available liquidity before acting.
For a typical NSO, compensation included at exercise adds to regular tax basis. A later sale creates gain or loss relative to that basis. ISOs can have different regular-tax and AMT bases, so keep exercise records even after paying AMT.
Compare a smaller exercise with waiting or selling when permitted. A tax advantage is only one input; concentration, price declines and an inability to sell can outweigh it.
Sale results use simplified capital-gains and investment-tax calculations. They do not fully reconcile exercise-year AMT with a later sale or model every disqualifying-sale outcome. Use a complete tax projection before relying on the estimated proceeds.
Source: IRS Topic 427: stock options.