Stock Option / RSU Valuation Calculator
Estimate after-tax value of stock options (ISO/NSO) and RSUs at exercise and at sale. US tax-aware (AMT, ordinary income, LTCG). Free.
Stock Option / RSU Valuation Calculator
Estimate after-tax value of US equity grants. Three modes: ISO (Incentive Stock Options — favourable LTCG treatment if held long enough, but the spread at exercise counts towards AMT), NSO (Non-Qualified Stock Options — ordinary income at exercise on the bargain element), RSU (Restricted Stock Units — full FMV at vest is ordinary income).
How to Use the Equity Valuation Calculator
Identify your grant type
An ISO (incentive stock option) can only go to an employee and gets the special holding-period treatment; an NSO (non-qualified option) is any other option; an RSU (restricted stock unit) has no strike price and delivers shares at vest. Your grant document says which you hold.
Enter grant + sale prices
The strike price is on your grant agreement (an ISO's cannot be below the stock's value at grant). The fair market value at exercise or vest is the market price for a listed company, and usually the latest 409A valuation for a private one. Sale price is whatever you're modelling — IPO price, tender offer, or current market. Amounts accept commas (10,000).
Set holding period correctly
Pick when you sell. An ISO sale is qualifying only after the later of 2 years from grant and 1 year from exercise; anything earlier is disqualifying, and the gain is ordinary income up to the spread at exercise (capped at the actual gain), with the rest capital — long-term if you held the shares more than a year after exercise, as in IRS Publication 525's Example 8. For NSOs and RSUs, more than a year after exercise or vest is long-term.
Use realistic tax rates
Use your marginal rates. The top federal bracket is 37%; long-term capital gains are taxed at 0%, 15% or 20% federally, plus the 3.8% net investment income tax above its income thresholds. Add your state's rate — some states have no income tax. The tool applies each rate flat, so it is an estimate, not a return.
ISO, NSO, RSU — The Three US Equity Grant Types and Why They Differ
The Three Grant Types Compared
Incentive Stock Options (ISO) are a US-specific grant type that gets favourable tax treatment if held long enough. At exercise, no ordinary income is recognised — but the bargain element (FMV − strike) is added to your Alternative Minimum Tax (AMT) calculation. If you hold for 2 years from grant + 1 year from exercise, the eventual sale is taxed at long-term capital gains rates on the full appreciation from strike to sale. If you sell earlier ("disqualifying disposition"), the gain becomes ordinary income up to the bargain element — never more than your actual gain — and only the excess is capital gain (IRS Publication 525).
Non-Qualified Stock Options (NSO) can be granted to employees and non-employees alike. At exercise, the bargain element (the spread between the stock's value and the strike) is ordinary income immediately, and it becomes part of your basis in the shares. Post-exercise appreciation is capital gain — short-term if held under 1 year, long-term if held 1+ year. NSOs are tax-disadvantageous compared to ISOs for employees but cleaner for the company.
Restricted Stock Units (RSU) are common at listed companies. There's no strike price — at vest, you receive shares worth their FMV, which becomes ordinary income immediately (often with shares withheld to cover tax — "sell-to-cover"). Post-vest appreciation is capital gain. Federal withholding on that income is usually the flat 22% supplemental rate (37% on supplemental wages above USD 1 million a year), which can be less than the tax actually owed (IRS Publication 15).
AMT — The ISO Tax Trap That Catches People Off Guard
The Alternative Minimum Tax is a parallel calculation: you pay it only when your tentative minimum tax exceeds your regular tax. ISO exercise doesn't trigger regular income tax, but the spread at exercise is an adjustment to your alternative minimum taxable income (Form 6251, line 2i) — unless you sell the shares in the same calendar year. For 2026 the exemption is USD 90,100 single / USD 140,200 married filing jointly, phasing out above USD 500,000 / USD 1,000,000, and the rates are 26% and 28% (28% above USD 244,500 of AMT income after the exemption). A large exercise can create an AMT bill the following spring even though no shares were sold. This calculator reports the adjustment but does not compute AMT, because that depends on the rest of your return.
AMT paid because of an ISO exercise can generally be recovered as a credit in later years, but not necessarily soon — the cash-flow problem at exercise time is real. Before a large exercise, run the numbers through Form 6251 or with a tax adviser.
"AMT on an ISO exercise is owed in cash by April 15, even when the shares are private and there is no way to sell any of them to pay it."
The 83(b) Election and Why It Matters
For early-stage startup employees receiving restricted stock or early-exercising options, the 83(b) election can change the tax a great deal. Without it, restricted stock is taxed as it vests, on the value at each vesting date. With it, you include the value when the shares are transferred to you (often low for early-stage equity), and later growth is capital gain. The election must be filed no later than 30 days after the date the property was transferred — Form 15620 or a written statement — and IRS Publication 525 says it cannot be made for a stock option itself, only for the shares an early exercise delivers. If the shares are later forfeited, the tax paid is not refunded.
The 83(b) window is thirty days from transfer, and then it is gone
ISO = Incentive Stock Option. US-specific. Favourable LTCG treatment if held 2yr grant + 1yr exercise.
NSO = Non-Qualified Stock Option. Bargain element at exercise = ordinary income.
RSU = Restricted Stock Unit. Full FMV at vest = ordinary income. Modern public-co standard.
The ISO spread is an AMT adjustment; AMT is due only if tentative minimum tax exceeds regular tax (2026 exemption USD 90,100 single).
US LTCG rates: 0% / 15% / 20% federal by income bracket. Plus 3.8% NIIT for high earners.
The 83(b) election must be filed within 30 days of the shares' transfer; it taxes their value then, not at each vesting date.
The USD 100,000 ISO limit: options on stock worth more than USD 100,000 (valued at grant) that first become exercisable in one calendar year are treated as NSOs (IRC §422(d)).
A 409A valuation by an independent appraiser is presumed reasonable for options granted within 12 months of its date (Treas. Reg. §1.409A-1).
RSU withholding is usually the flat 22% federal supplemental rate (37% above USD 1 million) — often below the tax actually owed (IRS Publication 15).
The UK's EMI scheme allows options worth up to £250,000 per employee over three years; Business Asset Disposal Relief on a sale is 18% from 6 April 2026.
Frequently Asked Questions
- ISO (Incentive Stock Options) get favourable US tax treatment: no ordinary income at exercise, just AMT impact, then long-term capital gains on the eventual sale if held long enough. NSO (Non-Qualified Stock Options) treat the bargain element as ordinary income immediately at exercise. ISOs are restricted: only employees, a strike at least the stock's value at grant, and options on more than USD 100,000 of stock (valued at grant) first exercisable in one year are treated as NSOs. NSOs can go to contractors and directors and have no such cap.
- Alternative Minimum Tax — a parallel US tax computation designed to prevent high-income taxpayers from zeroing out tax via deductions. ISO bargain element (FMV at exercise − strike) doesn't trigger regular income tax but DOES count for AMT. AMT is owed only if your tentative minimum tax — 26% and 28% of AMT income above the exemption (USD 90,100 single / USD 140,200 married filing jointly in 2026) — exceeds your regular tax. A large exercise can create an AMT bill even though no shares were sold, and AMT paid this way can generally come back as a credit in later years. This calculator reports the adjustment, not the tax.
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A section 83(b) election — on IRS Form 15620 or a written statement — lets you include restricted stock in income at its value when it is transferred to you, instead of at each vesting date. For early-stage employees that value is often low, so the election means little tax up front and capital-gain treatment on later growth. It must be filed no later than 30 days after the transfer. It cannot be made for an option itself, only for shares (for example, from an early exercise), and tax paid is not refunded if the shares are forfeited.
- RSUs have no strike price — at vest, the full FMV is ordinary income on your W-2. Federal withholding is usually the flat 22% supplemental rate (37% on supplemental wages above USD 1 million in the year), so if your marginal rate is higher you owe the difference at filing time (IRS Publication 15). Post-vest appreciation is capital gain (ST/LT based on hold time). Options (ISO/NSO) have strike prices that you pay to exercise — and the spread between strike and FMV at exercise determines tax. RSUs are operationally simpler; options are more tax-flexible.
- Depends on company stage and your liquidity. Pros of early ISO exercise: it starts the holding-period clock, and a small spread means a small AMT adjustment; for unvested shares an 83(b) election fixes that spread at exercise. Cons: you're paying real cash for shares that might end up worthless if the company fails, and AMT can arise on illiquid stock. Exercise only what you can afford to lose, and model AMT on Form 6251 or with a tax adviser first — this tool does not compute it.
- Options granted below the stock's fair market value can be taxed harshly under section 409A, so private companies set strike prices from a valuation of their common stock. An independent appraisal dated no more than 12 months before the grant is presumed reasonable (Treas. Reg. §1.409A-1(b)(5)(iv)(B)). Common stock is usually valued below the preferred shares investors buy, because it carries fewer rights, so the 409A price is typically below the latest round's price.
- Acceleration provisions in your grant agreement may cause unvested options/RSUs to vest. Double-trigger acceleration vests on (1) an acquisition AND (2) your termination within a set period; single-trigger vests on the acquisition alone. An IPO usually comes with a lock-up period during which employees cannot sell. Both events typically trigger large tax bills in the year of acceleration; consult a tax advisor before the event happens, not after.
- Each country has its own rules. The UK's EMI (Enterprise Management Incentive) allows options worth up to £250,000 per employee in a three-year period; a qualifying sale can use Business Asset Disposal Relief, whose rate rose to 14% from 6 April 2025 and 18% from 6 April 2026. Singapore has no ISO-style statutory option, and its top resident income-tax rate is 24% from YA 2024 (IRAS). Compare the after-tax result under each country's rules rather than assuming one regime is better.
- No — the ISO is a creature of the US Internal Revenue Code (section 422), available only to employees of the granting corporation or its parent or subsidiary. Companies elsewhere grant plain options or restricted shares, taxed under local rules. If you work for a US company through a local subsidiary, which rules apply depends on the plan and on where you are tax resident; ask before you exercise.
- Three things. (1) Whether you are a US resident for tax depends on the residency tests, not the visa. (2) RSU income is generally sourced by where you worked over the period it was earned: IRS Publication 519 treats multi-year compensation as US-source in proportion to the days you worked in the United States, so a vest after you move home can still be partly US income. (3) Your home country may tax the same income; tax treaties and foreign tax credits decide how much of it is taxed twice. A cross-border vest is worth a tax adviser.
Method & sources
How it computes
US federal treatment per IRS Pub 525, at the user's own flat rates, in integer cents. NSO: spread at exercise is ordinary income. RSU: value at vest is ordinary income. ISO: nothing at exercise for regular tax; a qualifying sale is all capital gain, a disqualifying one ordinary up to the spread (capped at the gain), the rest capital, long-term if held over a year. The ISO spread is shown as the Form 6251 AMT adjustment, never as a tax (EquityGrantKernel).
What this tool implements
- ISO qualifying disposition: sold after the later of 1 year from transfer and 2 years from grant (IRS Pub 525). A disqualifying sale makes the gain ordinary income up to the spread at exercise and capital gain above it — long-term if the shares were held more than a year (Pub 525 Example 8: $200 wages, $300 capital gain); a loss is a capital loss with no ordinary income.
- AMT: the ISO spread is an adjustment on Form 6251 line 2i, with no adjustment if the shares are sold in the year of exercise; 2026 exemption $90,100 unmarried / $140,200 married filing jointly, phasing out above $500,000 / $1,000,000; 28% applies above $244,500 (Rev. Proc. 2025-32). The page reports the adjustment and does not compute AMT, which depends on the whole return.
- Section 83(b): file no later than 30 days after the property is transferred, on Form 15620 or a written statement; not available for a statutory or nonstatutory option itself (Pub 525).
- ISO $100,000 limit: options on stock worth more than $100,000 at grant first exercisable in a calendar year are treated as NSOs (IRC §422(d)); the strike may not be below the stock's value at grant (§422(b)(4)).
- Money in integer cents: each tax line rounded once; exercise cost + total tax + after-tax proceeds = gross proceeds.
- Corrected 2026-10-19: AMT shown as 28% of the spread "upper bound" and added to the total (28% is not an upper bound in the exemption phase-out; the credit is not automatic); every disqualifying ISO sale treated as short-term; 83(b) "within 30 days of grant"; UK EMI at a "10% capital gains rate" (BADR 18% from 6 April 2026); Singapore top rate 22% (24%); the ISO limit as $100,000 "vesting"; 409A as "IRS-required"; unsourced AMT dollar example, state rates and expat-filing advice removed.
Sources
- Internal Revenue Service. Publication 525, Taxable and Nontaxable Income (2025) — Stock Options, Restricted Property, Example 7 and Example 8. https://www.irs.gov/publications/p525
- Internal Revenue Service. Instructions for Form 6251, Alternative Minimum Tax—Individuals (2025), line 2i and the exemption worksheet. https://www.irs.gov/instructions/i6251
- Internal Revenue Service. Rev. Proc. 2025-32 (2026 inflation adjustments, §55 AMT exemption and 28% threshold). https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- Internal Revenue Service. IR-2025-103, IRS releases tax inflation adjustments for tax year 2026 (Oct 2025). https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustmen…
- Internal Revenue Service. Publication 15 (Circular E) — supplemental wage withholding 22% (37% over $1 million). https://www.irs.gov/publications/p15
- Internal Revenue Service. Topic no. 409, Capital gains and losses; Topic no. 559, Net investment income tax. https://www.irs.gov/taxtopics/tc409
- Internal Revenue Service. Publication 519, U.S. Tax Guide for Aliens — multiyear compensation sourced on a time basis. https://www.irs.gov/publications/p519
- 26 U.S.C. §422, Incentive stock options (Cornell LII). https://www.law.cornell.edu/uscode/text/26/422
What can make this go out of date
- The 2026 AMT exemption, phase-out and 28% threshold change each year with the IRS inflation revenue procedure; the UK BADR rate and the Singapore rate table are set by legislation.
Abridged — the full review record for this tool runs longer than the list above.
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