Tools · Option exercise
Stock option exercise calculator
Work out the cash cost of exercising, the bargain element, and — for ISOs — an AMT estimate built from the figures on your own Form 6251. Client-side only; nothing you type leaves the page.
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What the exercise costs
ISO — alternative minimum tax estimate
Exercising an ISO creates no ordinary income for regular tax. The spread is an AMT preference item, so it can still generate a tax bill in the year you exercise. The figures below are tax-year specific and change every year — take them from the IRS instructions for Form 6251 for your year of exercise and enter them here.
Enter your tax year’s exemption, phase-out threshold, and rate breakpoint to complete this estimate. Until all three are filled in, no AMT figure is shown — a partial number here would look authoritative and be wrong. The bargain element above is still the figure most people came for, and it is correct.
Read this before you act on the number
This is an estimate to inform a conversation with a CPA, not a tax computation. It uses a crude AMTI proxy — other ordinary income plus the bargain element — and nothing else. It ignores:
- · State income tax and any state-level AMT
- · ISO disqualifying dispositions and same-year sales
- · All other AMT adjustments and preference items
- · Tax credits, including the AMT credit carryforward from prior years
- · Capital gains and qualified dividend rate stacking inside the AMT base
- · Payroll tax, FICA, and Medicare surtaxes
- · Deductions, so the AMTI figure is a proxy rather than a Form 6251 line
The only rates hardcoded here are statutory and not inflation-indexed: 26% and 28% under IRC §55(b)(1)(A), and the 25% exemption phase-out under IRC §55(d)(3).
What exercising actually costs
The strike price is the part everyone quotes, and it is rarely the whole bill. Exercising means buying shares: options multiplied by the strike price, in cash, on the day. That money buys stock in a private company that they may not be able to sell for years.
The second cost is tax on the spread — the gap between the current 409A value and the strike price, multiplied by the number of shares. That figure is the bargain element. It is the number a CPA asks for first, and it drives everything downstream. Use the 409A value, not the last preferred round price; they are usually different, and the 409A is what the tax math runs on.
ISO vs NSO at exercise
The grant type decides how the spread is taxed on the day of exercise. It is the single biggest fork in the calculation.
| At exercise | ISO | NSO |
|---|---|---|
| Ordinary income for regular tax | None | The full spread |
| Employer withholding | None | Usually yes, on top of the strike cost |
| AMT preference item | Yes — the spread counts toward AMTI | No |
| Statutory AMT rates that can apply | 26% / 28% | Not applicable |
| Long-term capital gains clock | Starts at exercise; a qualifying disposition also needs two years from grant | Starts at exercise |
Why an AMT calculator for ISOs can only get you so far
Any honest AMT calculator for ISO exercises is a conversation starter. Whether AMT applies depends on the rest of a return: other preference items, credits, an AMT credit carryforward from a prior exercise, capital gains stacking, and state tax. This tool models one preference item and nothing else, which is why it shows its working rather than a single confident number.
A CPA will want the grant date, the strike price, the current 409A value, the number of shares, the vesting and exercise dates, the prior year’s return, and whether any shares will be sold in the same calendar year. Bring those and the answer takes minutes.
How this is calculated
Every figure on this page comes from these five lines, in order.
- Exercise cost = options × strike price
- Bargain element = options × max(0, 409A value − strike price)
- AMTI proxy = other ordinary income + bargain element
- Effective exemption = max(0, exemption − 0.25 × max(0, AMTI − phase-out threshold))
- Tentative minimum tax = 26% × min(base, breakpoint) + 28% × max(0, base − breakpoint), where base = max(0, AMTI − effective exemption)
AMT owed is the excess of tentative minimum tax over regular tax. The breakeven figure is found by bisection: the largest share count whose bargain element keeps tentative minimum tax at or under the regular tax estimate entered.
Sources
- 26 U.S. Code §55 — alternative minimum tax; the 26% and 28% rates at §55(b)(1)(A) and the 25% exemption phase-out at §55(d)(3). Cornell LII (accessed 2026-08-11)
- IRS — About Form 6251, Alternative Minimum Tax — Individuals. The exemption amount, phase-out threshold, and rate breakpoint are inflation-adjusted every year and are taken from these instructions rather than hardcoded here. irs.gov (accessed 2026-08-11)
This page is general information, not legal, tax, or financial advice. Glide is not a tax adviser. Talk to a qualified CPA about your own situation before exercising.