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Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.

Tax Center: ISO Basics

2017 UPDATES! Are there guidelines for calculating AMT trigger points? For example, if my spouse and I earn $200,000 per year, will we trigger the AMT when I exercise ISOs?

People who live in high-tax states and itemize tax deductions, or who have significant personal exemptions, can easily owe more in AMT than in regular taxes, particularly if they exercise and hold ISOs with a big spread. The figures in the table below estimate the tipping point for positive adjustments (e.g. ISO exercises) that, when added back to your taxable income, can trigger the AMT. The figures are based on tax law as of January 2017, and were provided by BNA Income Tax Planner, the income-tax-planning software preferred by leading tax practitioners. The AMT income exemption amounts for 2017, as indexed for inflation, are $84,500 for married joint filers and $54,300 for single filers.

The numbers in the table below assume that the taxpayer uses the standard deduction amount, that joint taxpayers claim two exemptions (single filers one), and that no state tax is paid during the year. These figures will change according to the number of exemptions you claim, any state tax you pay, and other factors stemming from your personal situation.

Adjustment Amounts To Regular Income That Will Trigger The AMT In 2017

Regular taxable income

Joint filers

Single filers

$50,000

$38,964

$25,591

$75,000

$28,387

$24,629

$100,000

$27,079

$21,742

$125,000

$23,914

$18,280

$150,000

$18,145

$14,819

$175,000

$14,398

$11,358

$200,000

$10,936

$9,054

$225,000

$7,242

$7,625

$250,000

$4,619

$6,196

$275,000

$3,190

$5,534

$300,000

$2,219

$4,867

$325,000

$2,319

$4,627

$350,000

$2,419

$10,045

$375,000

$2,516

$15,467

$400,000

$2,616

$19,931

$425,000

$3,194

$27,029

$450,000

$3,194

$37,384

$475,000

$5,252

$47,742

$500,000

$15,609

$58,099

The graph below represents the data in the table above. (Click on the image to enlarge the graph in a new browser window.)

These numbers assume that the regular taxable income does not include long-term capital gains or qualified dividends (taxed at a rate of 15% or 20%, depending on yearly income). If your income does include such items, the AMT trigger points may be even lower.

In the table above, the amount of AMT income (AMTI) that triggers AMT (e.g. from the ISO exercise spread) begins to shrink when your income exceeds approximately $160,000 because of the phaseout zone for the AMTI exemption amounts. This AMTI exemption amount is phased out for high-income individuals by 25 cents for every dollar of AMTI. In 2017, for married joint filers the phaseout range starts at $160,900 of AMT income; for single filers, the phaseout starts at $120,700 of AMT income. The exemption is fully phased out when AMTI is equal to or exceeds $498,900 for joint filers and $337,900 for single filers.

See also the articles and FAQs on this website about various other AMT topics, including the AMT calculation and methods of limiting and managing the AMT.

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