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.
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.