Held >1 year after exercise (options) or vest (RSU)
Estimated Net After-Tax Value
$170,000
10,000 ISO shares at $5.00 strike | Long-term holding
Exercising these ISOs may trigger the Alternative Minimum Tax (AMT). The bargain element of $200,000 is treated as AMT income at exercise, even if you do not sell the shares.
AMT Income
$200,000
Potential AMT
$29,718
2024 AMT exemption: $85,700. Rates: 26% up to $232,600, then 28%.
Qualifying Disposition (Long-term)
Hold shares at least 2 years from grant date AND 1 year from exercise date. Entire gain taxed at long-term capital gains rates (0%/15%/20%).
Disqualifying Disposition (Short-term)
Spread at exercise taxed as ordinary income. AMT may still apply at exercise even before selling.
| Grant Type | Gross Gain | Tax (Short-Term) | Tax (Long-Term) | Best Net Value |
|---|---|---|---|---|
| ISOSelected Incentive Stock Options | $200,000 | $74,000 | $30,000 incl. AMT | $170,000 |
| NSO Non-Qualified Stock Options | $200,000 | $74,000 | $74,000 | $126,000 |
| RSU Restricted Stock Units | $250,000 | $92,500 | $92,500 | $157,500 |
No shares vest during the 12-month cliff period. At month 12, 2,500 shares vest at once.
| Share Price | Total Gain | Est. Tax | Net After Tax |
|---|---|---|---|
| $6.25 | $12,500 | $1,875 | $10,625 |
| $12.50 | $75,000 | $11,250 | $63,750 |
| $18.75 | $137,500 | $20,625 | $116,875 |
| $25.00Current | $200,000 | $30,000 | $170,000 |
| $37.50 | $325,000 | $62,352 | $262,648 |
| $50.00 | $450,000 | $97,352 | $352,648 |
| $75.00 | $700,000 | $167,352 | $532,648 |
| $125.00 | $1,200,000 | $307,352 | $892,648 |
Break-even price: $5.00 (your strike price). Options are "underwater" and worthless below this price.
This calculator provides estimates only and should not be used as tax advice. Stock option taxation is complex and depends on many factors including your specific grant agreement, state tax laws, AMT history, and other income. Consult a qualified tax professional or financial advisor before making exercise or selling decisions.