If you exercise your options and sell all the resulting shares at the same time, no additional taxes are incurred. If you exercise and hold any shares to sell at a future date, any profit you incur on that future sale will be taxed as a capital gain. Capital gains on shares held more than a year are taxed at more favorable long-term gain rates. Capital gains on shares held a year or less are taxed at short-term rates, which are currently the same as ordinary income tax rates.
