Free tool
NSO Exercise Tax Calculator
Exercising non-qualified stock options turns the spread into ordinary W-2 income right away (IRC §83(a)) — no waiting, and no AMT. See your actual tax on the spread (federal + state + FICA) next to what your employer is likely to withhold.
Your NSO exercise
Estimate only — not financial or tax advice. Withholding is an estimate, not your final liability. Consult a qualified CPA before exercising.
Tax to exercise your NSOs
- Federal income tax
- $66,400
- State income tax
- $18,828
- Additional Medicare surtax
- $1,800
- FICA (Social Security + Medicare)
- $2,900
- Cash to exercise (strike × shares)
- $10,000
- Likely employer withholding
- $44,000
Based on tax year 2026 brackets and rates (IRC §83(a), IRS Pub 525). Actual tax stacks the spread on your other income; employer supplemental withholding follows IRS Pub 15. NSOs are not an AMT preference item, so no AMT is computed.
Comparing option types? Read ISO vs NSO
NSO exercise tax FAQ
How are NSOs taxed at exercise?
When you exercise a non-qualified stock option (NSO), the spread — (FMV at exercise − strike) × shares — is ordinary W-2 income in the year of exercise (IRC §83(a), IRS Pub 525). It is also subject to FICA (Social Security and Medicare). Unlike an ISO, an NSO exercise creates NO Alternative Minimum Tax preference item.
What will my employer withhold when I exercise NSOs?
The spread is treated as supplemental wages. Under IRS Pub 15, employers withhold federal income tax at 22% on supplemental wages up to $1 million in a year, and 37% on any amount above that — plus state withholding and FICA. That withholding is an estimate; the actual tax on the spread depends on your full-year brackets, so you may owe more (or get a refund) at filing.
Do NSOs trigger AMT like ISOs?
No. The AMT preference item applies to incentive stock options (ISOs) that are exercised and held, not to NSOs. An NSO exercise is taxed as ordinary income for regular tax, so this calculator does not compute AMT. If you have ISOs, use the ISO/AMT calculator instead.
Is this a substitute for tax advice?
No. This is a free estimate based on tax-year 2025 brackets, rates, and the FICA wage base. It does not handle multiple exercises across the year, state-specific supplemental rules, or your complete situation. Consult a qualified CPA before exercising.
Have ISOs instead of NSOs? Use the ISO/AMT calculator.