2026 Guide

Stock Compensation Tax Guide

RSU, NSO, ISO, AMT, and capital gains — each type of stock compensation is taxed differently. Here's what you need to know for 2026.

RSU

Restricted Stock Units (RSU)

When your RSUs vest, the fair market value of the shares counts as supplemental wages on your . Your employer withholds federal tax (flat 22% or aggregate method), (7.65%), and state tax.

If you later sell the shares, any additional gain above the vest-date value is taxed as a capital gain — short-term (ordinary rates) if held under 1 year, long-term (0/15/20%) if held over 1 year.

Dedicated RSU calculator: Calculate vest withholding, sell-to-cover shortfall, and sale projection →

NSO

Non-Qualified Stock Options (NSO)

When you exercise NSOs, the spread between the exercise price and fair market value ( − strike) is taxed as supplemental wages — same as a bonus. Your employer withholds federal, , and state tax on the spread.

Calculate withholding today: Use the bonus calculator — enter the spread amount as the bonus →

ISO + AMT

Incentive Stock Options (ISO) & AMT

ISOs are more complex. At exercise, there's no regular tax or immediately — but the spread ( − strike) is an preference item. If AMT exceeds your regular tax, you owe the difference.

For 2026 (post-): exemption is $90,100 (single) / $140,200 (), with phaseout starting at $500,000 single / $1,000,000 MFJ at the new 50% rate. AMT rates are 26% on the first $244,500 above exemption, 28% above.

If you hold the shares more than 2 years from grant and 1 year from exercise (qualifying disposition), the spread becomes long-term capital gain. Otherwise it's a disqualifying disposition and the spread is taxed as ordinary income.

Dedicated ISO/AMT calculator: Calculate your AMT, exemption with phaseout, and crossover point →

Read the full AMT guide → (parallel calculation, all common triggers, the AMT credit, $200K worked example)

CAP GAINS

Capital Gains on Sale

When you sell shares acquired through RSU/NSO/ISO, any gain over your cost basis is a capital gain. Long-term (held over 1 year): 0%, 15%, or 20% depending on income. Short-term (1 year or less): ordinary rates up to 37%.

Additionally, if your MAGI exceeds $200,000 (single) or $250,000 (MFJ), you owe a 3.8% Net Investment Income Tax (NIIT) on investment gains.

Cost basis is the FMV when RSUs vested (not $0), or the FMV when you exercised NSO (not the strike). Incorrect basis is the #1 mistake on sale reporting.

Dedicated Capital Gains calculator: Calculate LTCG/STCG tax, NIIT 3.8%, and state tax — all 50 states →