Equity Compensation Tax Treatment 2027 Calculator

Compare equity comp tax treatment 2027 — ISO, NSO, RSU, ESPP. Each taxed differently at grant, exercise, sale. Critical for option/RSU planning.

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ISO (Incentive Stock Options)

No tax at exercise (regular). BUT spread between strike & FMV is AMT income. Sell after holding 2yr+ grant AND 1yr+ exercise = LTCG on full gain. Otherwise NSO-like treatment.

NSO (Non-Qualified Stock Options)

At exercise: ordinary income on spread (strike to FMV). At sale: capital gain on spread (FMV to sale). Two taxable events. Simple but more total tax.

RSU (Restricted Stock Units)

At vest: ordinary income on full FMV. Employer withholds shares for tax. At sale: cap gain on appreciation since vest. Most popular tech equity.

ESPP (Employee Stock Purchase Plan)

Buy at 15% discount via payroll. Discount = ordinary income at purchase. Hold 2 years from offer + 1 year from purchase = LTCG on remainder.

Source: irs.gov Publication 525 Equity Compensation. Last updated: May 2026.