ISO AMT Exposure Modeler

The ISO bargain element is an AMT preference: under IRC §56(b)(3) the spread is included in AMTI for the exercise year. AMTI = ordinary income + ISO spread + other adjustments. The exemption is reduced by 25% of AMTI above the phase-out threshold (IRC §55(d)(2)); the tentative minimum tax is 26% of the first $244,500 of the AMT base plus 28% above (IRC §55(b)(1)(A), 2026 threshold per Rev. Proc. 2025-32 §4.10); the AMT is the excess of TMT over regular tax (IRC §55(a)) and is carried as a minimum tax credit (IRC §53). The regular tax uses ordinary income only and the 2026 §1 rate tables. Sale-year regular tax, state AMT, the §1202/QSBS interaction and the IRC §422(a) disposition-holding-period rules sit outside this model; treat the output as a planning estimate and prepare the actual return with a tax professional.