Total Value
$50,000
Total Tax
$15,944
Net Proceeds
$34,056
What is the difference between ISO and NSO?
Incentive Stock Options (ISOs) receive preferential tax treatment -- they are not taxed at exercise, and if you hold the shares for more than 1 year after exercise and 2 years after grant, gains are taxed at the lower long-term capital gains rates. Non-Qualified Stock Options (NSOs) are taxed as ordinary income at exercise on the spread between the grant price and fair market value.
How are RSUs taxed?
Restricted Stock Units (RSUs) are taxed as ordinary income when they vest. The full fair market value on the vesting date is treated as W-2 income, subject to federal income tax, state tax, Social Security, and Medicare. There is no tax at the time of grant, and you don't need to pay anything to receive the shares.
What is a qualifying disposition for ISOs?
A qualifying disposition for ISOs requires holding the shares for at least 1 year after exercise and 2 years after the grant date. If both conditions are met, the entire gain from the grant price to the sale price is taxed at long-term capital gains rates. If either condition is not met, it is a disqualifying disposition taxed as ordinary income.
What is AMT risk with ISOs?
When you exercise ISOs, the spread (difference between fair market value and grant price) is an adjustment for the Alternative Minimum Tax (AMT). Even though you owe no regular income tax at exercise, you may owe AMT. This is especially significant for large exercises when the stock price is well above the grant price.
IRS-Aligned: This calculator uses 2025 federal tax brackets, capital gains rates, and FICA rates. Stock option taxation is complex -- consult a tax advisor for your specific situation.
Disclaimer: This calculator provides estimates based on current IRS rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your filing status, state of residence, deductions, and individual circumstances. Always consult a qualified tax professional or CPA before making financial decisions. Read our terms
This calculator uses official rates and thresholds from:
- IRS Publication 525 — Taxable and Nontaxable Income
- IRS Topic 427 — Stock Options
- IRS Publication 550 — Investment Income and Expenses
Last verified: March 2026 · Tax year 2025. Results are indicative — consult a qualified accountant for personalised advice.
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