What is the difference between ISO and NSO tax treatment?

ISOs (Incentive Stock Options) have no regular income tax at exercise, but may trigger AMT. NSOs (Non-Qualified Stock Options) trigger ordinary income tax on the spread at exercise. Both are taxed as capital gains when sold, but ISOs held for 2+ years from grant and 1+ year from exercise qualify for long-term capital gains rates on the full amount.

Should I file an 83(b) election?

File an 83(b) election if your equity is subject to vesting AND the current value is low. This lets you pay tax on the value NOW (when it's near zero) instead of as it vests (when it could be much higher). You must file within 30 days of grant. This calculator shows the exact tax savings.

What is AMT and how does it affect my stock options?

AMT (Alternative Minimum Tax) is a parallel tax system. When you exercise ISOs, the spread between your strike price and the 409A valuation counts as AMT income — even though it's not regular taxable income. If your AMT exceeds your regular tax, you pay the difference. AMT can create a large tax bill even though you haven't sold any shares.

How Much Tax Will You Owe on Your Startup Equity?

ISO vs NSO, 83(b) elections, AMT estimates — see your exact tax liability before you exercise. Free calculator used by 500+ startup employees.

Estimates only — not tax advice. Consult a CPA for your specific situation.

Estimate Your Exercise Tax

Option Type

Number of Shares

Strike Price (per share) From your option grant agreement

Current 409A / FMV (per share) Company's latest 409A valuation

Your Annual Income (AGI estimate) Used to estimate your marginal tax bracket

Filing Status

Total Spread Value
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FMV minus strike price x shares

Regular Tax at Exercise

AMT Liability

Additional tax from ISO exercise

Total Tax at Exercise

What you owe to the IRS

Estimate Your Sale / Exit Tax

Option Type

Number of Shares

Strike Price (per share)

Exercise Price / FMV at Exercise

Expected Exit Price (per share)

Holding Period After Exercise

Years Since Grant

Your Annual Income (AGI)

Gross Proceeds
--
Exit price x shares

Cost Basis (Strike + Tax Paid)

What you paid to acquire shares

Total Tax at Sale

Net After Tax

What you keep

Should You File an 83(b) Election?

If your equity is subject to vesting, an 83(b) election lets you pay tax NOW on the current value (which may be near zero) instead of as shares vest (when they could be worth much more).

Days to File

Must file within 30 days of grant

File with IRS

Mail to IRS + keep copy

Pay Tax Now

On current (low) value

✓

Save Later

Avoid tax on big gains

Equity Type

Number of Shares

Current Value Per Share (at grant) Often near $0 for early-stage companies

Expected Value at Vest (per share) What you think shares will be worth when they vest

Vesting Period (years)

Your Annual Income (AGI)

Tax WITHOUT 83(b)

Tax as shares vest at future value

Tax WITH 83(b)
--
Tax now at current (low) value

Potential Tax Savings

ISO vs NSO: Which Saves You More Tax?

Enter your grant details and see a side-by-side comparison of tax outcomes for ISO and NSO treatment.

Number of Shares

Strike Price (per share)

Current FMV (per share)

Expected Exit Price (per share)

Your Annual Income (AGI)

Hold After Exercise

ISO Total Tax (Exercise + Sale)

NSO Total Tax (Exercise + Sale)

ISO Net After All Tax
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NSO Net After All Tax

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Tax Disclaimer: This calculator provides estimates for educational purposes only. Tax laws are complex and change frequently. These calculations use simplified assumptions (2025 federal tax brackets, standard deduction, no state tax). Your actual tax liability depends on many factors including state taxes, other income, deductions, and IRS rule changes. Always consult a qualified tax professional (CPA or tax attorney) before making exercise or 83(b) election decisions. FounderMath is not a tax advisor.

How Much Tax Will You Owe on Your Startup Equity?

Estimate Your Exercise Tax

Estimate Your Sale / Exit Tax

Should You File an 83(b) Election?

ISO vs NSO: Which Saves You More Tax?

Get Your Complete Equity Analysis

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