Free tool
AMT-Free ISO Exercise Limit Calculator
Exercising and holding ISOs creates an AMT preference equal to the bargain element (FMV − strike). Up to a crossover point the AMT exemption absorbs it and you owe $0 AMT — past it, AMT kicks in. Find the exact number of ISOs you can exercise this year without triggering AMT.
Your situation
The AMT-free limit is set by federal AMT and is the same in every state.
Estimate only — not financial or tax advice. Consult a qualified CPA before exercising ISOs or making other financial moves.
Your AMT-free exercise limit
- Exercise cost for those shares
- $6,732
- AMT-free bargain element built
- $33,660
- AMT if you exercise ALL vested options
- $72,724
Based on tax year 2025 AMT exemption, phase-out, and brackets (IRS Form 6251). The limit is the largest share count where the engine computes $0 AMT; exercising more starts incurring the AMT shown above. Exercising up to the limit still costs the exercise price and defers capital gains tax to a later sale.
Read the deep dive: How AMT is calculated on ISOs
AMT-free ISO exercise FAQ
Why does exercising ISOs trigger AMT?
When you exercise incentive stock options and hold the shares, the bargain element — (fair market value − strike price) × shares — is not taxed for regular income tax, but it IS an Alternative Minimum Tax preference item (IRS Form 6251, Line 2i). Enough bargain element pushes your AMT above your regular tax, and the difference is AMT you owe.
What is the AMT-free ISO exercise limit?
It is the largest number of ISOs you can exercise and hold in a tax year while still owing $0 in AMT. Below that crossover point, the AMT exemption absorbs the bargain element; above it, AMT kicks in. This tool finds that exact share count from your income, strike, FMV, and filing status.
Does exercising up to the AMT-free limit avoid all tax?
No — it avoids AMT this year. You still pay the exercise cost (strike × shares), and you will owe capital gains tax when you eventually sell. A qualifying disposition (hold 2 years from grant and 1 year from exercise) taxes the gain at long-term capital gains rates. This tool only estimates the AMT crossover; confirm a full plan with a CPA.
Does my state change the limit?
No. The AMT-free exercise limit is set by federal AMT (IRS Form 6251) and is the same in every state. Your state income tax still affects your overall tax bill — model that in the full ISO/AMT calculator.
Is this a substitute for tax advice?
No. This is a free estimate based on tax-year 2025 brackets, exemptions, and phase-outs. It does not account for AMT credit carryforwards, prior-year AMT, deductions, or your complete situation. Consult a qualified CPA before exercising ISOs.
Want the full exercise plan — conservative / optimal / aggressive scenarios, AMT credit, and sale timing? Try the full ISO AMT Calculator.