This article uses your net effective tax rate to calculate the taxes on the bargain element -- 32.25% on someone earning $150k in California. They should be using your _marginal_ tax rate for that calculation, which would be 24+9.3=33.3% on the first 170050-150000=$20,050 of the bargain element, 32+9.3=41.3% on the next 215950-170050=$45900, and 35+9.3% on the rest.<p>Or, much easier is to use a calculator like the one they link[3], and calculate your total taxes on your current earnings, calculate total taxes on the earnings if you were to exercise, and then subtract.<p>I calculate $81,599-$38,038 = $43,561 in additional taxes, rather than the $41,893 they said.<p>I agree with the author's take on ISOs:<p>> It’s a bit complicated – and dry – so if you have ISOs you should probably talk to your tax person<p>My opinion on ISOs is essentially that for some middle ground between "few enough ISOs that you don't trigger AMT" and "so many ISOs that the potential tax savings are more than big enough to pay for a financial professional", it's not worth it to try and exercise ISOs early.<p>AMT on ISOs will complicate your taxes for years to come: in some circumstances, you can recover some of the money you paid as AMT on the ISOs in future years -- essentially, ISO bargain element is a specific category of AMT-taxable income which gives you an AMT credit for future years, which you can recover with form 8801 [4]. For several years after my ISO exercise, I was able to eat away that credit by paying the AMT tax amount when it was _lower_ than my standard income tax.<p><pre><code> 1. https://taxfoundation.org/2022-tax-brackets/
2. https://www.nerdwallet.com/article/taxes/california-state-tax
3. https://smartasset.com/taxes/income-taxes#H3aXczXUcM
4. https://www.irs.gov/forms-pubs/about-form-8801</code></pre>