# How to find your ISO AMT crossover point (2026) | OptionsAhoy > Your AMT crossover is the largest ISO exercise you can make in a year before alternative minimum tax adds to your bill. The math, the four traps, the calculator. Markdown twin of https://optionsahoy.com/learn/amt-crossover (canonical). More for agents: https://optionsahoy.com/llms.txt Alternative Minimum Tax # How to find your ISO AMT crossover point (2026) Your AMT crossover is the largest ISO exercise you can make in a year before alternative minimum tax adds to your bill. The math, the four traps, the calculator. By Andrew Korytko , Founder & CEO , AlphaLatitude Inc. · Published May 13, 2026 · [AMT credit, NSO mistakes, and others →](https://optionsahoy.com/learn) Your **alternative minimum tax (AMT) crossover** is the largest incentive stock option (ISO) exercise you can make in a year before AMT starts adding tax on top of your regular bill. To find it, compute your regular tax for the year, then raise the ISO bargain element (shares times fair market value minus strike) until your tentative minimum tax catches up with your regular tax: the meeting point is your crossover. For a married-joint filer with $300,000 of income in California, it lands around $60,000 of bargain element in year one (about 699 shares at an $86 spread); your own number depends on your income, filing status, state, and spread, and the calculator below solves it from your inputs. Below the crossover, exercising costs no extra federal tax that year. Above it, every additional share costs 26-28% of the bargain element in federal AMT, plus state AMT in four states. Four common traps decide whether your exercise stays on the cheap side of that line or turns into a six-figure surprise. One of them is pure calendar timing. AMT is a calendar-year trap. By the time April arrives, the decisions that moved your bill are already made. ## The four most expensive AMT mistakes AMT makes you yawn? The four below wake up anyone when they hit. 1. **Failing to plan the calendar of equity events.** A January RSU vest, a mid-year ISO exercise, and a December stock bonus all in the same tax year compound: the vest and bonus push regular tax up, the exercise's bargain element pushes AMTI up further, and the bill arrives in April for a number that could have been much smaller in a different year. Same logic on a one-day scale: an exercise on December 30 versus January 2 lands in different tax years with potentially very different AMT bills. Always check what else falls in the same tax year before scheduling a large exercise; if your crossover is tight, deferring across the calendar boundary can dramatically lower total AMT. 2. **Ignoring state AMT.** A single filer in California exercising a $50,000 bargain element pays roughly $13K of federal AMT plus $3.5K of California AMT: a 33% effective rate. Federal-only modeling underestimates the cost meaningfully in CA, MN, CO, and CT. 3. **Exercising without the cash to pay AMT.** AMT is owed before April 15th, regardless of whether you sold any shares. If you exercise without selling, you owe AMT in cash on top of the strike price you already paid. Make sure the liquidity is there, or plan a same-year disqualifying disposition to fund the bill. 4. **Pushing past the income threshold where AMT relief gets clawed back.** AMT applies a 26-28% rate to your AMT income (regular taxable income plus the ISO bargain element), minus an "exemption" that works like an AMT-specific standard deduction ($90K single / $140K MFJ for 2026). The 2025 One Big Beautiful Bill Act (OBBBA) tightened the phaseout above $500K single / $1M MFJ of AMT income: the exemption shrinks by 50 cents per extra dollar (pre-2026 was 25 cents at a higher threshold). A large exercise can push you well past the threshold and erode $20K-$40K of exemption that was protecting you. Spreading across years keeps it intact. Each trap is worth a closer look once you have the underlying mechanics down. The rest of this article walks through how AMT actually charges you, how to find your own crossover, and how the multi-year credit eventually pays back most of what you owed. ## What AMT actually charges you for When you exercise an ISO, you pay the strike price and receive shares worth the current share price. The difference between those two is your **bargain element**, and it is your unrealized gain at exercise. Regular tax does not care about the bargain element until you sell the shares. AMT does. The full bargain element gets added to your Alternative Minimum Taxable Income (AMTI) in the year you exercise, even if you never sell a share. Example A 5,000-share exercise You exercise 5,000 ISOs with a $2 strike when the stock is at $40 per share. Your bargain element is (40 − 2) × 5,000 = **$190,000**. Regular tax treats this as $0 of income in the exercise year. AMT treats it as $190,000 of taxable income, sitting on top of whatever you would have owed otherwise. ## The AMT exemption and rates AMT has its own version of the standard deduction. For tax year 2026, the **AMT exemption** is $90,100 for single filers and $140,200 for married filing jointly (inflation-adjusted from 2025's $88,100 / $137,000). AMTI below your exemption is not taxed. The One Big Beautiful Bill Act made these higher exemption levels permanent. There is also a phaseout. The OBBBA ([Section 70107](https://taxfoundation.org/research/all/federal/one-big-beautiful-bill-act-tax-changes/)) tightened it starting tax year 2026: the exemption shrinks by **50 cents** for every dollar your AMTI exceeds **$500,000 (single)** or **$1,000,000 (MFJ)**. Pre-2026, the rate was 25 cents per dollar starting at $626,350 / $1,252,700. For equity-rich tech employees, this means a large exercise can push you past lower thresholds and erode the exemption at twice the previous rate. ## Your AMT crossover Your **AMT crossover** is the largest exercise you can do in a single year before AMT starts adding tax on top of your regular bill. Below the crossover, AMT is zero (or small enough that your regular tax already covers it). Above the crossover, every additional ISO you exercise costs you 26-28% of the bargain element in extra federal tax, plus state AMT in four states. Why this is the number that matters: ISOs are valuable specifically because their bargain element does not trigger ordinary income at exercise. Exercising up to your crossover preserves that benefit. Exercising above it gives part of the benefit back as AMT. Your specific crossover depends on: - Your salary and any other regular income - Your filing status (single, married filing jointly) - Other deductions and credits - The strike price vs. the current share price - Any state AMT you owe on top of federal Plug in your grant and salary; the Multi-Year ISO Exercise Schedule Calculator shows your exact crossover and how a multi-year schedule moves the ceiling. Prefer to ask an AI assistant this question? The OptionsAhoy MCP server runs the same math from inside ChatGPT, Claude, Cursor, or VS Code. [See install options →](https://optionsahoy.com/for-agents?_=mcp-hint-learn#install) ## Why timing matters: the multi-year strategy Here is the move that turns the crossover from a hard ceiling into a planning lever: it resets every January. If exercising your whole stack in one year would push you well past the crossover, split the exercises across multiple tax years. Each year, exercise up to your crossover, pay zero (or minimal) AMT, and start the long-term capital-gains clock on those shares. The total bargain element does not change. But you stay in regular-tax territory for as much of it as possible. Example One year vs. six years Single filer, $250,000 W-2 income, 30,000 ISOs at a $2 strike, share price now $40. Total bargain element across all 30,000 shares: $1.14M. Exercise everything in one year: roughly $330K of federal AMT premium on top of regular tax, owed in cash by April 15th of the year following exercise. Add another $50K-$70K in California or other AMT states. Cash out of pocket, possibly with nothing sold to fund the bill. Exercise 5,000 ISOs per year over six years: AMT lands close to zero in most years, depending on your other income and state. Same total bargain element, dramatically smaller total tax. ## The AMT credit (and how you get it back) AMT is technically a prepayment, not a permanent tax. The portion of your AMT caused by **deferral items** (like an ISO exercise where you do not sell the shares that year) generates an **AMT credit** you carry forward to future years on [Form 8801](https://www.irs.gov/forms-pubs/about-form-8801). In any future year where your regular tax bill is higher than what AMT would have charged in that year, the credit pays you back. Selling some of those ISO shares as a **qualifying disposition** (held 2 years from grant and 1 year from exercise per [IRS Topic 427](https://www.irs.gov/taxtopics/tc427), taxed at long-term capital gains) is one of the cleanest ways to spike regular tax above the AMT floor and unlock the credit. Practically: a multi-year exercise plus hold plus sell plan can recover most of the AMT you paid, but only if the regular-tax-vs-AMT crossover flips in your favor in those later years. If your future regular tax stays low (extended career break, no qualifying dispositions), the credit sits unused on your return year after year. The [AMT credit recovery deep dive](https://optionsahoy.com/learn/amt-credit-recovery) walks the year-by-year mechanics with worked numbers. The credit is non-refundable ## State AMT can change the math Four states currently have their own AMT that applies on top of federal AMT: - **California (7%)**: applies to most federal AMT preference items, including the ISO bargain element ([FTB Schedule P](https://www.ftb.ca.gov/forms/2025/2025-540-p.pdf)) - **Colorado (3.47%)**: applies to Colorado AMTI in excess of the regular state tax base - **Connecticut (19% of federal AMT)**: piggybacks directly on the federal AMT computation - **Minnesota (6.75%)**: applies to the federal AMTI base with state adjustments per [MN Statute 290.091](https://www.revisor.mn.gov/statutes/cite/290.091) ([MN DOR](https://www.revenue.state.mn.us/alternative-minimum-tax)) If you live in one of these states, your effective AMT rate on the bargain element runs roughly **29-35%** (federal 26-28% plus state). That is enough to change which exercise size is worth doing in a given year. Most other states have no separate AMT; they had one historically and either repealed it (New York in 2014 per [TSB-M-15(1)I](https://www.tax.ny.gov/pdf/memos/income/m15_1i.pdf), Wisconsin in 2019, Iowa in 2023) or never adopted one. State-residency timing If you're planning a move from a high-tax state to a low-tax one and the ISO exercise is on the horizon, residency timing matters but with a major catch: California sources stock-option income by the workday ratio between grant and exercise per [FTB Publication 1004](https://www.ftb.ca.gov/forms/misc/1004.html). If you earned the ISO grant working in CA, CA claims its share of the AMT preference income regardless of where you exercise. The move helps for the post-move slice of workdays, or for grants and vesting that occur after the move. Residency rules are also strict; CA in particular aggressively audits "departing residents." You need clean documentation (lease, voter registration, driver's license, employer payroll change) backing the move before the exercise date. ## Where to go from here For your specific numbers, the [Multi-Year ISO Exercise Schedule Calculator](https://optionsahoy.com/tools/amt-iso) computes your crossover, builds a multi-year exercise schedule, and tracks AMT credit recovery year by year. It also handles the 90-day post-termination exercise window (per [IRC §422(a)(2)](https://www.law.cornell.edu/uscode/text/26/422)) with departure-date-aware planning. If you also have NSOs, RSUs, or a concentrated single-stock position to think about, the [NSO sell-vs-hold](https://optionsahoy.com/learn/nso-sell-vs-hold), [RSU withholding gap](https://optionsahoy.com/learn/rsu-withholding-gap), and [concentration risk](https://optionsahoy.com/learn/single-stock-concentration-risk) articles cover the adjacent decisions. The calculators here handle one decision in isolation. [**OptionsAhoy**](https://optionsahoy.com/?_=learn-amt-crossover#request-access) plans the full picture jointly: every ISO, NSO, RSU vest, concentrated position, and hedge, across bullish, neutral, and bearish scenarios. The output is a year-by-year Plan optimized for total after-tax wealth. Free during beta. ## Common questions ### How do I figure out the AMT crossover point for exercising my ISOs? The alternative minimum tax (AMT) crossover point is the largest incentive stock option (ISO) bargain element you can add in a year before your tentative minimum tax starts to exceed your regular tax. Below it, exercising costs no extra federal tax that year; above it, each additional share triggers AMT. You find it by computing your regular tax, then raising the ISO bargain element (shares times fair market value minus strike) until the two taxes meet. For a married-joint filer with $300,000 of income in California, the crossover is roughly $60,000 of bargain element in year one (here, about 699 shares at an $86 spread). The exact number depends on your income, state, and other AMT items; the calculator solves it for your inputs. ### I have 50,000 vested ISOs with a $4 strike at $90 fair market value. Should I exercise all at once or split across multiple tax years? Splitting beats a lump exercise here, and an optimized schedule beats an even split. Exercising all 50,000 at once front-loads a large alternative minimum tax (AMT) bill that you recover only slowly. For this position (married joint, $300,000 income, California, four-year horizon), the after-tax net final value is about $975,000 for a lump exercise, $988,000 for an even four-year split, and $1,261,000 for the optimized schedule, which exercises a small amount in the early years to bank AMT credit and the bulk once the shares qualify for long-term capital gains. The right split depends on your income, state, and price path; the calculator returns the optimized year-by-year plan. 50,000 ISOs at a $4 strike, $90 fair market value, married filing jointly, $300,000 income, California, four-year horizon: prefilled, so the optimized schedule is one click away. Educational content for general information, not personalized tax, legal, or financial advice. Consult a qualified professional for your specific situation. See [Terms](https://optionsahoy.com/terms). Related questions **What does the calculator need to compute my AMT crossover point?** Five inputs set your Alternative Minimum Tax (AMT) crossover: your ordinary income for the year, your filing status, your state, your strike price, and the current fair market value per share. From those, the calculator at https://optionsahoy.com/tools/amt-iso computes the largest Incentive Stock Option (ISO) bargain element you can add before your tentative minimum tax exceeds your regular tax, then extends the single-year crossover into the share-per-year schedule that maximizes after-tax value through your horizon, against the relevant federal tax code plus all 50 states and DC. **Should I exercise all my ISOs at once or split across multiple tax years?** Splitting is almost always better because the AMT exemption resets each calendar year. The optimal split depends on your bargain element per share, your baseline ordinary income, state of residence, expected company growth, and planning horizon. The optimizer at https://optionsahoy.com/tools/amt-iso searches the full multi-year candidate space (federal + 50 states + DC tax code) and returns the optimal share-per-year schedule across its full candidate space, with per-year tax breakdown and net-final-value comparison versus lump-sum and even-split alternatives. **How does the AMT credit work after I exercise ISOs?** AMT paid on the ISO bargain element generates a federal AMT credit (Form 8801) recoverable in future years when your regular tax exceeds your tentative minimum tax. The credit carries forward indefinitely. Multi-year planning should account for both the AMT paid up front and the year-by-year credit recovery; the calculator at https://optionsahoy.com/tools/amt-iso models both in net present value terms across your horizon. [All equity-comp questions →](https://optionsahoy.com/tools-faq) Run the numbers ## Plan your ISO exercise with your own grant The article lays out the framework. The multi-year iso exercise schedule calculator runs it for your specific numbers in seconds. Free, no signup. [Open the Multi-Year ISO Exercise Schedule Calculator →](https://optionsahoy.com/tools/amt-iso) Read next - [Alternative Minimum Tax AMT credit recovery in plain English The alternative minimum tax (AMT) you pay on an exercise-and-hold ISO is mostly a prepayment, not a cost: Form 8801 carries it forward as a credit against future regular tax. The catch is the pace. A single filer earning $250,000 claws back about $14,900 a year, so a $134,654 credit takes *nine-plus years* unless something changes. Here are the mechanics, what speeds them up, and how the calculator schedules around them.](https://optionsahoy.com/learn/amt-credit-recovery) - [Non-qualified stock options NSO exercise: sell now or hold for long-term capital gains? Sell at exercise, for most people: the NSO bargain element is taxed as ordinary income either way. The decision framework, plus six traps that cost real money.](https://optionsahoy.com/learn/nso-sell-vs-hold) - [Concentration and diversification How much of your net worth should be in one stock? Above 10% of liquid net worth, a single stock is worth managing; above 25% it shapes your outcomes. How to diversify without losing half your gains to tax.](https://optionsahoy.com/learn/single-stock-concentration-risk) ## You read the framework. Beta runs it on every grant you own. OptionsAhoy plans every ISO, NSO exercise, RSU vest, hedge, and sale jointly across years and across bullish, neutral, and bearish scenarios. Free during beta.