Anduril Stock Options AMT: What Exercising Costs

By Joe Forish, CFA, CFP®|Published On: Sep 25, 2026|Categories: Financial Planning, ISOs|

You exercise your Anduril stock options on a Tuesday afternoon. No shares sell. No cash arrives. Your brokerage account looks exactly the same as it did that morning. What does arrive, eventually, is an Anduril stock options AMT bill you never saw coming.

Then April shows up.

It brings a tax bill – sometimes a six-figure one – and it has absolutely no interest in the fact that you cannot sell any of the shares that triggered it. That bill is the alternative minimum tax, and Anduril stock options AMT is the single most common way equity-rich pre-IPO employees get into serious financial trouble. This happens not because of a bad investment or a market crash, but because of a tax on a gain you cannot access.

Two things are true about that bill, and most articles only tell you one of them. In the year you exercise, it is larger than you expect. Over a long enough horizon, it is also substantially recoverable. Planning well means holding both facts at once – and understanding one Anduril-specific detail that changes the stakes entirely.

For the broader picture on what you hold, start with the Anduril employee equity guide.

The Anduril ISO Tax Bill Nobody Budgets For

There is a particular kind of financial stress that comes not from losing money but from owing taxes on money you cannot spend. If you are facing this, you are not alone, and you are not in trouble because you made a bad decision. You are in this position because the tax code treats an unrealized, illiquid gain as though it were income.

How the Two-System Calculation Works

The federal government runs two parallel tax calculations for people with certain types of income: ordinary income tax and the alternative minimum tax. You compute your liability under both systems and pay whichever figure is higher. Most people never trigger AMT because the two calculations produce similar results. For someone exercising a large block of incentive stock options at a fast-growing company, however, the gap between the two can be substantial.

ISOs carry a specific tax advantage: when you exercise them, no ordinary income appears on your W-2. Instead, the IRS adds the bargain element – the spread between your strike price and the fair market value on exercise day – into the AMT calculation only. That single entry can add hundreds of thousands of dollars to your AMT income without changing your regular taxable income at all.

So your regular tax stays flat. Your tentative minimum tax spikes. You pay the difference. And the shares remain locked up.

That is the bill nobody budgets for. With the right planning, though, it functions more like a deferral than a permanent penalty.

What Actually Triggers AMT on Anduril Stock Options

The engine behind Anduril stock options AMT is the bargain element. Specifically:

Bargain element = (409A fair market value − strike price) × shares exercised

Two numbers in that formula deserve extra attention.

The fair market value used here is the 409A appraisal – not Anduril’s headline round valuation. When Anduril’s Series H valued the company at $61 billion, that figure reflected what investors paid for preferred shares carrying liquidation preferences and protections that your common stock does not have. The IRS requires a separate appraisal of common stock, and that appraisal comes in at a meaningful discount. Your finance team can provide the current 409A figure.

Your strike price, meanwhile, is fixed at grant. Every time a new round closes and the 409A rises, the spread on unexercised shares grows. That dynamic matters, and it comes up again in the section on waiting.

The actual AMT mechanics work like this: you add the bargain element to your income for AMT purposes, compute the tentative minimum tax, then compare it to your regular tax. If the tentative minimum tax is higher, the difference is your additional liability. For a senior Anduril employee with a large block of vested ISOs and a 409A that has risen significantly since the grant date, that difference can easily exceed six figures.

How 2026 AMT Rule Changes Hit Anduril ISO Exercises Harder

Understanding your AMT exposure this year requires knowing that the rules shifted in January 2026, and the changes are material.

Two adjustments hit at once. First, the income thresholds at which the AMT exemption begins phasing out dropped to $500,000 for single filers and $1,000,000 for married filing jointly. Second, the phaseout rate doubled from 25 cents to 50 cents per dollar above those thresholds.

For 2026, the base exemption is $90,100 for single filers and $140,200 for married filing jointly. The AMT rate is 26% on the first $244,500 of AMT base and 28% above that. Because the phaseout rate doubled, the exemption now disappears twice as fast as it did a year ago.

How the Phaseout Compounds Against You

There is a layering effect worth understanding before you run any numbers.

The bargain element raises your AMT income. Raising your AMT income can push you past the phaseout threshold. Crossing that threshold erodes the exemption that would have sheltered part of the bargain element. Consequently, a large exercise partially destroys its own cushion – the bigger the exercise, the less protection the exemption provides.

Moreover, at typical Anduril compensation levels, many dual-income households clear $500,000 in regular income before any option exercise at all. The phaseout is no longer a theoretical edge case for senior staff. For many households, it is already the starting condition when they open the calculator.

Your Crossover Point for Anduril ISO AMT Exposure

This concept reframes the entire decision.

Because you pay the higher of the two tax figures, there is a quantity of bargain element you can add before the AMT figure overtakes your regular tax. Below that quantity, exercising costs you nothing in additional AMT. Above it, every additional dollar of spread carries a 26% or 28% price tag.

That quantity is your crossover point, and it is specific to your household in a specific tax year:

Crossover bargain element = (regular tax − tentative minimum tax) ÷ marginal AMT rate

A Worked Example: What the Crossover Actually Looks Like

To illustrate the method: consider a married filing jointly household with $520,000 in W-2 income, holding 20,000 vested ISOs at a $1.20 strike against a $22.00 current 409A. Before any exercise, that household’s regular tax runs roughly $109,000 and its tentative minimum tax roughly $101,000. The gap is about $8,000. Divided by a 28% marginal AMT rate, the crossover lands near $28,000 of bargain element – which, at a $20.80 spread per share, is approximately 1,374 shares.

Out of twenty thousand vested shares.

That is roughly seven percent of the position she can exercise without triggering any AMT. The remaining ninety-three percent costs 28 cents on every dollar of spread. These figures are illustrative – state taxes, deductions, and a spouse’s income all shift the result – but the method holds. Almost nobody at an Anduril salary has generous AMT headroom, because high regular income and high tentative minimum tax track each other closely.

The honest implication cuts against standard advice. “Exercise up to your crossover each year” is sound guidance as far as it goes. At ~1,300 shares a year, however, clearing a 20,000-share position takes fifteen years. Anduril will almost certainly not remain private that long. Therefore, the realistic plan is not zero AMT. It is deliberate AMT: exercising to the crossover where it is free, accepting a measured bill above that, and knowing exactly what you recover later.

The Safety Valve Anduril Employees Do Not Have

This section separates an Anduril ISO exercise from the same exercise at a public company, and it is absent from nearly every general AMT article you will find.

At a public company, there is a well-known fix for an exercise that goes wrong. If you exercise in January and the stock falls by half before December, you can sell in that same calendar year. A same-year sale triggers a disqualifying disposition: the spread gets reclassified as ordinary income, and the AMT preference disappears entirely. The problem you created in January is gone by December.

For an Anduril employee, that escape hatch does not exist.

Why Anduril’s Transfer Restrictions Change the Math

Anduril shares cannot be sold freely. Transfer restrictions, a right of first refusal, and board consent requirements all apply. Export control and foreign ownership rules further narrow the permissible buyer universe beyond what most commercial technology companies face. A company tender offer is the realistic path to any liquidity event, and you have no control over whether one opens before December 31 of the year you exercise.

The consequence is straightforward, and it deserves plain language: when you exercise Anduril stock options, the AMT consequence locks in the moment you act. If the 409A falls afterward, you cannot reverse the decision. You will have paid tax on a spread that no longer exists in the market. (Yes, that is exactly as frustrating as it sounds.)

That asymmetry is the strongest argument for exercising in measured tranches rather than all at once. A public-company employee gets a second look before year-end. An Anduril employee gets one. Make it count.

The AMT Credit: Your Money Isn’t Gone Forever

Now for the other half of the picture – the part most people never hear.

AMT triggered by an ISO exercise is a deferral item, not an exclusion item. That distinction matters enormously, because deferral items generate a minimum tax credit that carries forward indefinitely and is claimed on Form 8801. In plain terms: the AMT you pay on an Anduril stock options exercise is closer to a prepayment than a permanent penalty.

Two Ways the Credit Comes Back

First, annual recovery

In any later year where your regular tax exceeds your tentative minimum tax, you can apply the credit up to the amount of that excess. If you paid $109,000 in AMT this year and next year your regular tax exceeds your TMT by $8,000, you recover $8,000. The remainder carries forward.

Second, recovery on sale

This is the larger mechanism. When you exercise, you acquire two different cost bases in the same shares. Your regular tax basis is the strike price. Your AMT basis is the fair market value at exercise. When you eventually sell, the regular gain computes from the lower basis while the AMT gain computes from the higher one. The AMT gain is therefore smaller, the gap between the two calculations widens in your favor, and that widening releases the credit at scale.

In the household illustration above: regular basis $1.20, AMT basis $22.00, a $20.80 difference per share across 20,000 shares. That $416,000 basis differential is the engine that eventually returns the credit.

The Anduril-specific catch is timing. Annual recovery typically trickles in slowly – a few thousand dollars per year for a household whose regular tax and TMT sit close together. The real recovery arrives on the sale, and for a private company holding, that sale may be years away without a guaranteed date. In the meantime, six figures of your capital sits with the Treasury, earning nothing, while the underlying asset cannot be liquidated.

That is not a reason to avoid exercising. It is a reason to size every exercise against your actual liquidity position rather than against the eventual credit recovery. “I get it back later” is true. “I get it back on a schedule I control” is not.

One record-keeping point that follows directly from this: track the dual basis for every lot, along with the Form 3921 your employer issues for each exercise. The credit is worthless if you cannot substantiate it in the year the sale happens – potentially a decade from now.

Waiting Is Not Free Either

If exercising creates a tax bill, the natural instinct is to wait. At a company on Anduril’s trajectory, that instinct has a measurable price.

Your strike price is fixed. The 409A is not. Anduril’s valuation moved from $8.5 billion at the Series E in 2022 to $61 billion at the Series H in May 2026. The 409A does not track preferred-round marks one-for-one, but it moves in the same direction.

Therefore, the AMT cost of exercising the same shares rises with every new round. The decision is “pay a known amount now against a larger, unknown amount later – with the capital gains holding period and the AMT credit both running from whichever date you choose.”

Neither side of that choice is free. Anyone presenting delay as the cautious option is counting only one of the two costs.

Is Your Grant Even All ISOs?

Before modeling anything related to Anduril stock options AMT, confirm what you actually hold – because a meaningful number of employees are wrong about this.

Federal rules cap the aggregate value of stock for which ISOs first become exercisable in any calendar year at $100,000, measured at the grant date. Anything above that ceiling converts to non-qualified stock options automatically.

For a large grant issued when Anduril’s valuation was rising steeply, that cap bites. You may hold a single grant that is part ISO and part NSO – two different tax treatments inside one document. The NSO portion generates ordinary income at exercise, withheld through payroll, with no AMT preference at all.

Your grant agreement and equity platform will show the split. Model the two portions separately, because blending them produces a number that is wrong in both directions.

What to Do With Your Anduril Stock Options AMT, in Order

Planning your Anduril stock options AMT exposure comes down to seven steps. Work through all of them before you exercise anything.

Step 1: Confirm Your Instrument Split

Determine how many of your options are genuine ISOs and how many crossed the $100,000 annual limit into NSO treatment. The grant agreement specifies this, and your equity platform typically displays it clearly.

Step 2: Get the Current 409A Valuation

Request the current appraisal from your finance team – not the Series H headline number, not an approximation. This single figure drives every downstream calculation in your AMT analysis.

Step 3: Calculate Your Crossover Point

Run the formula using your actual household return: your W-2 income, your spouse’s income, your state taxes, and your deductions. The crossover point is the figure the entire exercise decision hinges on, and it is specific to your household.

Step 4: Model Three Paths

Compare total tax cost across years for three scenarios: exercising only up to your crossover point, exercising a deliberate tranche above it, and exercising your full vested position. Look at multi-year totals, not just this April’s bill.

Step 5: Price the Irreversibility

For any tranche above your crossover, run a stress test. If the 409A fell 40% in the following year and no tender offer opened, could you cover the AMT bill without financial hardship? If not, reduce the tranche until the answer is yes.

Step 6: Plan the Funding Before You Exercise

Arrange how you will pay the AMT bill before you exercise – not after the fact. If you hold a security clearance, how you source those funds carries consequences beyond the financial. The Anduril options and security clearance guide covers what to report and when.

Step 7: Set Up Your Records Now

Create a record for every lot you exercise: strike price, exercise date, 409A valuation at exercise, number of shares, and the Form 3921 your employer issues. Track the dual basis per lot. Store everything somewhere you will actually find it in eight years.

Frequently Asked Questions About Anduril Stock Options and AMT

How much AMT will I owe on an Anduril option exercise?

The amount depends on your bargain element, household income, filing status, and state. The mechanism adds the spread between your strike and the 409A to your AMT income, then compares the resulting tentative minimum tax to your regular tax liability. For 2026, the AMT rates are 26% and 28%, the base exemption is $90,100 single and $140,200 married filing jointly, and the exemption phases out beginning at $500,000 and $1,000,000 respectively. No rule of thumb is reliable here – the interaction between the phaseout and the bargain element makes rough estimates misleading in both directions. Run the actual numbers with a qualified tax professional before you exercise.

Can I exercise Anduril ISOs without triggering AMT?

Yes, up to your crossover point. That is the quantity of bargain element that fits inside the gap between your regular tax and your tentative minimum tax. For high earners at Anduril, that headroom is often modest, and it resets each tax year – so you may have more room in a year with large deductions or lower household income than in a typical year.

Do I get the AMT back?

Largely yes, over time. AMT from an ISO exercise generates a minimum tax credit that carries forward indefinitely, claimed on Form 8801. It returns gradually in years where your regular tax exceeds your tentative minimum tax, and more substantially when you sell – because your AMT basis in the shares is higher than your regular basis, shrinking the AMT gain on the sale. For a private company holding, full recovery can take many years from the exercise date, and the timing is not under your control.

Can I undo an Anduril ISO exercise if the value drops?

Not practically. At a public company, selling in the same calendar year as the exercise eliminates the AMT adjustment. Anduril shares cannot be sold at will – transfer restrictions apply, and a tender window may not open before December 31. Treat the AMT consequence as effectively fixed at the moment of exercise.

Should I wait for the IPO instead?

Waiting is not a cost-free alternative. Your strike is fixed while the 409A rises, so the same shares carry a larger bargain element – and therefore larger potential AMT exposure – the longer you wait. Waiting also forecloses the ability to spread the liability across multiple tax years and delays the start of your long-term capital gains holding period. Model both paths carefully rather than defaulting to either.

What is the difference between the 409A and the $61B valuation?

The $61 billion figure represents what investors paid for preferred shares, which carry liquidation preferences and downside protections your common stock does not have. The 409A is an independent appraisal of common stock, required by IRS rules, and it is the figure the IRS uses to calculate your bargain element. The two numbers move in the same direction but are not equal – and using the wrong one in your calculations will produce a significantly incorrect result.

Anduril Stock Options and AMT: What Exercising Costs