Option exercise tax calculator (2026)
See the 2026 federal tax on an ISO or NSO exercise, the AMT, and how many ISOs you can exercise this year before the AMT starts.
Calculator
The tax on an option exercise in 2026
Enter your salary and the exercise. See the federal tax and the cash that the exercise needs this year.
Option type
Filing status
The value of one common share on the day you exercise.
- Cash for the strike
- $40,000
- 40,000 × $1.00
- Spread
- $160,000
- 40,000 × $4.00
- Extra federal tax
- $32,440
- All of it is AMT
- Cash needed
- $72,440
- Strike plus tax, this year
Extra federal tax by the number of options you exercise
- As ISOs (AMT)
- As NSOs
As ISOs, the $160,000 spread adds no regular income tax, but it counts for the AMT. Your AMT is $32,440. With the strike, you need $72,440 in cash this year, for shares that you cannot sell yet.
With this salary, you can exercise approximately 8,807 options (a $35,231 spread) this year before the AMT starts. As NSOs, the same exercise adds $46,900 of tax.