ISO vs NSO Stock Option Calculator
Incentive stock options and non-qualified stock options are taxed nothing alike. Compare three exercise-and-sale paths — NSO exercise-and-sell, ISO disqualifying disposition, ISO qualifying disposition — per share, after tax. US-specific.
AMT is not in this math. Exercising ISOs can trigger alternative minimum tax on the spread even though no regular tax is due — a five-figure surprise for some exercises. This calculator ignores it; talk to a tax professional before a large ISO exercise.
Common questions
What makes an ISO disposition “qualifying”?
Two clocks must both run out: more than 2 years after the grant date AND more than 1 year after the exercise date. Hit both and the entire gain from strike to sale is taxed at long-term capital-gains rates. Miss either and the spread becomes ordinary income — the disqualifying disposition.
What is AMT and why isn't it in the calculator?
The alternative minimum tax is a parallel tax system. When you exercise ISOs and hold, the spread counts as AMT income even though no regular tax is due — which can mean a five- or six-figure tax bill in the exercise year with no cash from a sale to pay it. AMT depends on your whole return, so no per-share calculator can model it honestly. Get professional advice before a large ISO exercise.
Should I early-exercise my options?
Early exercising (before vesting, usually with an 83(b) election) can start the capital-gains clocks sooner and lock in a small spread. But you pay cash for shares you might forfeit if you leave, and the 83(b) election is irrevocable. This calculator does not model 83(b) elections — it compares the standard exercise-and-sell paths.