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Stock Option & RSU Tax Calculator

RSU vests, ISO and NSO exercises in one tax year: regular tax, AMT, FICA, what your employer withholds and what is left to pay.

Updated · By Niraj Kumar · 1 source

You

Filing statusFiling status
$
$

Withheld as supplemental wages before any equity.

$
%
0%15%

A flat rate on the extra income. Use 0 for Texas, Washington or Florida. California's top rates run 9.3–13.3% and it has its own AMT, which is not modelled.

Your company's stock

$

For a private company, the latest 409A value.

RSUs vesting this year

shares

Incentive stock options (ISOs)

shares

$
After exercisingAfter exercising
$

For the long-term gain and AMT credit estimate. Defaults to today's price.

Non-qualified stock options (NSOs)

shares
$

Your RSU grant

shares
years
1 yr10 yrs
months
None24 mo
Vests everyVests every
%
−50%+100%

Concentration

shares
$

Cash, funds, retirement accounts and home equity.

Extra tax from your equity$45,108$33,368 of it is not withheld
Equity income
$190,000
RSU value plus option spreads
Federal income tax
$11,010
AMT
$31,158
comes back as a credit in later years
Social Security & Medicare
$940
State
$2,000
Extra tax this year
$45,108
23.7% of your equity income
Withheld by your employer
− $11,740
Left to pay
$33,368
Raise W-4 withholding or pay estimated tax to avoid an underpayment penalty
Your bracket32%
  • Federal income tax24%
  • AMT69%
  • Social Security & Medicare2%
  • State4%

Your ISO exercise

AMT crossover
1,135 shares
$34,077 of bargain element with no AMT this year
Cash to exercise
$50,000
5,000 shares at $10.00
AMT from this exercise
$31,158
Break-even share price
$16.23
Below this, the shares are worth less than the exercise cost plus AMT
Selling this year compared with holding for a qualifying sale
Sell this yearHold, sell after a year
Sale price$40.00$40.00
Tax this year$58,895$31,158
Tax on the sale—$35,529
AMT credit used—− $30,750
Total tax$58,895$35,937
Kept after exercise cost and tax$91,105$114,063

$408 of AMT credit is still unused after the sale and carries forward to later years.

AMT at different exercise sizes
ISOs exercised and heldBargain elementAMTCash needed
568$17,040$0$5,680
1,135$34,050$0$11,350
1,703$51,090$4,423$21,453
2,270$68,100$8,846$31,546
3,405$102,150$17,760$51,810

Sell-to-cover on your RSU vest

Vest value
$40,000
1,000 shares
Withholding rate
29.3%
Supplemental federal, Social Security, Medicare and state
Shares sold to cover
294 shares
$11,740 withheld
Shares you keep
706 shares
Tax the vest actually adds
$13,950
Under-withheld
$2,210
Your bracket is 32%, but federal withholding is a flat 22%

Your grant, year by year

Value of each year's vestsAfter taxTax
$0$20 K$40 K$60 K1234
Vesting schedule with tax
Grant yearSharesAvg priceValueTaxAfter tax
11,200$40.00$48,000$17,098$30,902
21,200$40.00$48,000$17,098$30,902
31,200$40.00$48,000$17,098$30,902
41,200$40.00$48,000$17,098$30,902

Each year's tax assumes the same salary and bonus as above and 2026 brackets.

Concentration risk

After this year you would hold 5,706 shares, worth $228,240: 48% of your net worth. Many planners suggest keeping a single stock under 10–20%, all the more so when your paycheck depends on the same company.

What a fall in the share price would do
Share priceYour sharesShare of net worth
$40.00 today$228,24048%
$30.00 (−25%)$171,18041%
$20.00 (−50%)$114,12031%
$10.00 (−75%)$57,06019%

The $31,158 of AMT is due in April whatever the price does. At a $16.23 share price, the ISO shares are worth only what you paid to exercise them plus that tax.

How the Stock Option & RSU Tax Calculator works

RSU vests and NSO spreads are wages: they add to ordinary income and pay Social Security and Medicare. ISOs pay no regular tax at exercise, but the bargain element (share price minus strike, times shares) counts for the alternative minimum tax if you still hold the shares at year end. The AMT ignores the standard deduction and allows an exemption instead, which phases out at 50 cents per dollar of AMTI above the threshold. You owe whichever is higher of the regular tax and the tentative minimum tax. The AMT an ISO causes becomes a credit you can use in later years.

AMT = max(0, TMT − regular tax), TMT = 26%/28% × (AGI + ISO spread − exemption)
Bargain element
(Share price at exercise − strike price) × shares
AMT exemption
$90,100 single, $140,200 married filing jointly, phasing out above $500,000 / $1,000,000
TMT
Tentative minimum tax: 26% on the first $244,500 after the exemption, 28% above
Crossover
The ISO spread at which TMT reaches your regular tax, so AMT starts
Supplemental rate
22% federal withholding on RSU vests and NSO exercises, 37% above $1M

Worked example

A single filer on a $200,000 salary exercises and holds 5,000 ISOs with a $10 strike while the shares are worth $40, with 1,000 RSUs vesting at $40.

  1. 1Regular tax on the salary and RSU vest: $48,104
  2. 2The ISO bargain element is 5,000 × ($40 − $10) = $150,000, which is added to AMT income: $390,000
  3. 3Less the $90,100 exemption, the tentative minimum tax is $79,082
  4. 4AMT is the excess over regular tax: $30,978. You could have held about 1,170 ISO shares with no AMT at all
  5. 5The RSU vest is withheld on at 22% plus FICA: $9,740

The equity adds $43,288 of tax this year, and $33,548 of it is not withheld. The ISO's $30,978 of AMT comes back as a credit in later years.

Frequently asked questions

Why do I owe tax in April when my RSUs were already withheld on?

Employers usually withhold federal tax on RSU vests at the flat 22% supplemental rate, whatever your bracket. If your salary and vests put you in the 32%, 35% or 37% bracket, each vest is under-withheld by 10 to 15 cents a dollar, and the difference is due when you file. The calculator shows the gap so you can raise your W-4 withholding or make estimated payments.

How much of my net worth should be in my employer's stock?

Many planners suggest keeping any single stock below 10 to 20% of your net worth. With employer stock, your salary depends on the same company, so a fall can hit both at once. The concentration panel shows your share after this year's vests and exercises, and what a 25%, 50% or 75% fall would leave.

How are RSUs, ISOs and NSOs taxed differently?

RSUs are taxed as wages when they vest, on their full value. NSOs are taxed as wages when you exercise, on the spread between the share price and the strike. Both pay Social Security and Medicare and are withheld on. ISOs pay no regular income tax or FICA at exercise. If you hold the shares past December 31, the spread counts toward the alternative minimum tax. If you sell them within a year of exercise, or two years of grant, the spread becomes ordinary income instead.

What is the AMT credit and when do I get it back?

AMT caused by an ISO exercise is a timing difference, so it becomes a minimum tax credit carried forward on Form 8801. In a later year, the credit can cut your regular tax down to that year's tentative minimum tax, and no further. It often comes back when you sell the ISO shares, because the AMT basis is higher than the regular basis and the sale then pushes regular tax above the TMT. It can take several years to recover in full.

Why does the calculator use only the standard deduction?

Most filers take it, and the AMT adds it back in full, so it is the cleanest way to show the ISO effect. If you itemize, state and local taxes are also added back for the AMT, which makes AMT more likely than shown here.

Sources

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