The Basics of How Non-Qualified Stock Options are Taxed

The income tax rules for an exercise of non-qualified stock options are relatively straightforward. You generally do not owe taxes when you are granted non-qualified stock options. You don’t owe when your non-qualified stock options vest, either. This no-tax timeframe allows you to defer income tax while potentially creating considerable wealth if the value of your shares increases. Exercising your non-qualified stock options is what creates a taxable event. But because you control when you...