ISO vs NSO Stock Option Tax Calculator

Compare tax obligations between Incentive Stock Options (ISO) and Non-Qualified Stock Options (NSO). Calculate AMT at exercise and long-term capital gains.

ISO vs NSO Stock Option Tax & AMT Calculator

Compare Incentive Stock Options (ISO) vs Non-Qualified Options (NSO). Calculate Alternative Minimum Tax (AMT), ordinary income, and long-term capital gains.

Number of Options

Strike Price ($)

FMV at Exercise ($)

Anticipated Exit Price ($)

Ordinary Tax (%)

LTCG Tax (%)

AMT Rate (%)

ISO Long-Term Tax Advantage

$31,100

Additional net after-tax proceeds earned with qualifying Incentive Stock Options.

Incentive Stock Options (ISO)

AMT at Exercise: $56,000

Total Lifetime Tax: $136,850

Net Proceeds: $438,150

Non-Qualified Options (NSO)

Tax Due at Exercise: $78,700

Total Lifetime Tax: $167,950

Net Proceeds: $407,050

Navigating the Complexities of Startup Option Taxes

Understanding the tax differences between ISOs and NSOs is critical for anyone holding startup equity. Exercising without planning can lead to massive phantom tax bills on illiquid shares.

Key Features

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AMT Liability Estimator

Models the 26% to 28% Alternative Minimum Tax preference spread on unliquidated ISO exercises.

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Qualifying vs Disqualifying Disposition

Demonstrates holding requirements: held > 2 years from grant and > 1 year from exercise.

Common Use Cases

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Tech Employees Exercising Vested Options
Plan the cash required to pay upfront taxes when exercising startup option grants.
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Founders Structuring Equity Compensation
Decide whether to grant ISOs or NSOs to employees and contractors.

Frequently Asked Questions

What is the difference between an ISO and an NSO?

Incentive Stock Options (ISOs) can only be granted to W-2 employees and offer tax advantages: no ordinary income tax is owed at exercise (though AMT may apply), and all profit is taxed as long-term capital gains if holding periods are met. Non-Qualified Stock Options (NSOs) trigger immediate ordinary income tax on the spread at exercise.

What is the Alternative Minimum Tax (AMT) on ISOs?

When you exercise an ISO, the difference between the fair market value (FMV) and your strike price is treated as income for AMT purposes, potentially triggering an upfront tax bill even though you haven't sold any shares.