The AMT crossover point: exercising ISOs tax-free
The crossover is the exact exercise size where AMT starts to bite. Below it, your ISO exercise costs nothing in tax.
Defining the crossover
Your regular tax and tentative minimum tax are two lines that move at different rates as AMT income rises. The crossover is where they intersect — every dollar of bargain element below it is free, every dollar above it is taxed at AMT rates.
What moves it
Salary, bonus, RSU vests, state taxes, filing status and capital gains all shift the crossover. A big RSU vest year lowers the room available for a tax-free ISO exercise.
Using it annually
Run the number in Q4 with actual year-to-date income, then exercise the remaining headroom before December 31, or in January if next year looks lighter.
Educational content, not tax advice. Your outcome depends on your grant documents, income and state. Equity Tax Engine models your actual position — join the waitlist.