How does the “Strike Price” affect NQSOs?
The strike price is the price at which you can buy the stock. If your strike price is $10 and the stock is trading at $50, your "spread" is $40...
Read More Non Qualified Stock Options
Which is “lower risk,” RSUs or NQSOs?
by Zajac Group | Last updated Mar 14, 2026 | FAQ
RSUs are generally “safer” because they are "full-value" shares. Even if the stock price drops 50%, your RSUs still have 50% of their original value. If the stock price drops...
Read More Does selling NQSOs affect my AMT?
by Zajac Group | Mar 13, 2026 | FAQ
No. Unlike ISOs, NQSOs do not directly trigger the Alternative Minimum Tax. They are treated as regular compensation, making the tax planning much more straightforward.
Read More Can I sell only some of my NQSOs?
by Zajac Group | Mar 13, 2026 | FAQ
Yes. You can exercise and sell in small batches to stay within certain tax brackets or to provide liquidity for specific goals throughout the year.
Read More If I sell immediately, how much tax will be withheld?
by Zajac Group | Mar 13, 2026 | FAQ
Employers are generally required to withhold 22% for federal taxes (or 37% if your supplemental income exceeds $1M). Keep in mind your actual tax bill may be higher depending on...
Read More What is a “Cashless Exercise”?
by Zajac Group | Mar 13, 2026 | FAQ
This is a "sell-to-cover" transaction where your broker sells just enough shares to pay for the strike price and the taxes, and gives you the remaining cash or shares. It...
Read More Why is Exercise and Sell usually better for NQSOs than ISOs?
by Zajac Group | Mar 13, 2026 | FAQ
Unlike ISOs, which have a specific "Qualified Sale" path that avoids ordinary income tax entirely, NQSOs always trigger ordinary income tax on the spread at exercise. The only thing a...
Read More Is there any case where holding NQSOs for LTCG actually pays off?
by Zajac Group | Last updated Mar 13, 2026 | FAQ
If you control unvested NQSO and your company offers an early exercise provision, you can exercise and hold your NQSO, file the requisite 83(b) election, pay the tax due now,...
Read More Why do I control fewer shares after I exercise my NQSOs in a sell to cover transaction?
by Zajac Group | Mar 13, 2026 | FAQ
When you exercise, you have to pay the strike price of the options and statutory tax withholding rates on the gain. Most people use a "sell-to-cover" or "net exercise," where...
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Rethinking Whether to Exercise and Hold Non-Qualified Stock Options for Long-Term Capital Gains Tax
by Daniel Zajac, CFP®, EA | Last updated Mar 13, 2026 | Non Qualified Stock Options
When it comes to evaluating strategies to exercise your Non-Qualified Stock Options (NQSOs), what is your best plan of attack? Do you: Exercise and sell all your NQSOs immediately, cashing...
Read More How are NQSOs taxed?
by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ
As a general rule, you will be subject to ordinary income tax on the bargain element when you exercise non-qualified options. This amount is often included in your w-2 at...
Read More When are NQSOs taxed?
by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ
NQSOs are not taxed when they are granted. An NQSO grant means your company gives you the right (or option) to buy a set number of stock shares at a...
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