PrivateTechSharesAMT credit
Also called: minimum tax credit
In one line
A credit you may earn in years you pay AMT, which can reduce your regular tax in later years.
In plain English
The AMT you pay on an ISO exercise isn't always lost. It often becomes a credit you can claw back against future regular tax, once your situations reverse — commonly after you sell the shares.
If you were explaining it to a 5-year-old
The extra tax you paid earlier gets written on an IOU. In a later year, you can use that IOU to pay less tax.
Why it matters when you sell
The credit softens the long-run cost of AMT, so the true tax of exercising ISOs is often lower than the first-year bill suggests — worth modelling before you sell.
Related terms
Put it to use
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
Primary references for this term: IRS (US tax). Our definitions are written in plain English and kept evergreen — see the glossary methodology. General information, not advice.
Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.