Plan your Character.AI NSO exercise
Calculator · free · no signup · pre-IPOCharacter.AI is pre-IPO. Plan your NSO exercise tax (federal, state, FICA) at any expected valuation.
Beta · invite-only · AlphaLatitude Inc. · Free Tools
Your grant
Seeded from secondary-market data, as of Aug 2, 2024
Tax inputs
Hold strategy
Best after-tax payout — at year 1
$221,097
Sell + invest wins by $41,083 over Hold 1 yr.
Estimates only. Not financial advice.
Sell + invest
Best payout| Bargain element (sale − strike) | $390,000 |
| Federal | |
| State | |
| Medicare | −$5,655 |
| Additional Medicare | −$3,510 |
| Market gain over 1 yr at 10.0% | $20,627 |
| LTCG on diversified gain (fed + state + NIIT) | −$5,796 |
| Net at year 1 | $221,097 |
Sell every share immediately; invest the after-tax cash at the market return for 1 yr, then liquidate. Diversified — no single-stock concentration risk.
Exercise + hold 1 yr
| Sale proceeds (year 1) | |
| LTCG tax (federal + state + NIIT) | $0 |
| Net at year 1 | $180,014 |
Sold 2,656 shares at exercise to cover strike + tax; 2,344 shares held 1 yr for LTCG.
Social Security + Medicare are payroll taxes (collectively called FICA) — they apply because you're exercising as a current employee.
Both columns are stated in year-1 dollars: sell-now proceeds compound at the market return and pay LTCG on the gain at year 1; any cash paid out of pocket on the hold side carries the same opportunity cost.
Net at year N — by hold period
Estimates only. Excludes AMT (NSOs do not trigger AMT), state-AMT, multi-state moves, and disqualifying-disposition edge cases. Not financial advice.
You calculated one NSO decision. The beta plans NSOs alongside RSUs and ISOs in a single multi-year tax plan.
Request beta access →About Character.AI
Character.AI is a privately held AI company, incorporated in Delaware and headquartered in Menlo Park, CA.
Last reported secondary-market price: $88 per share (as of 2024-08-02). Your own 409A may differ.
Conversational AI.
Equity grants at Character.AI typically include incentive stock options (ISOs) and non-qualified stock options (NSOs).
Character.ai is a generative AI chatbot service where users can engage in conversations with customizable characters. It was designed by the developers of Google LaMDA, Noam Shazeer and Daniel de Freitas.
Source: Wikipedia (CC BY-SA 4.0)
Noam Shazeer and Daniel De Freitas founded Character.AI in 2021 after leaving Google, where Shazeer had led the team that built the LaMDA conversational model. The company raised more than $150 million largely from a16z and reached a $1 billion valuation as consumer chatbot demand surged in 2023. In August 2024, Google paid roughly $2.7 billion for a non-exclusive license to Character.AI's technology and rehired Shazeer, De Freitas, and members of the research team into DeepMind in a deal regulators have described as a reverse acquihire. Character.AI continued as an independent company under interim CEO Dominic Perella, with most staff staying, and uses both internally-developed and third-party language models to power its consumer chatbot product.
Sources: techcrunch.com · washingtonpost.com · cnbc.com
Equity comp at Character.AI
- In August 2024, Google struck a deal to license Character.AI's technology and hired the founding team (including Noam Shazeer and Daniel De Freitas) back to Google in a transaction valued at roughly $2.7 billion. Character.AI continued as an independent company under new leadership. Employees who joined before the acquihire held equity in an entity that lost its founding team but retained its technology license; post-deal equity value depends on the standalone company's performance, not Google's stock.
Researched 2026-05-07.
OptionsAhoy is an independent tool and is not affiliated with, endorsed by, or sponsored by Character.AI.
Character.AI NSO exercise creates ordinary income on the bargain element (federal, state, and FICA) at the price on the day you exercise. The calculator works at any valuation, so you can model your exercise cost at the current 409A FMV, an expected IPO price, or post-IPO scenarios.
Example: at Character.AI's last reported price of $88, exercising 5,000 NSOs with a $26.4 strike creates a $308,000 bargain element, taxed as ordinary income on the day you exercise. Combined federal + state + FICA on that bargain typically lands between $83,160 and $138,600 depending on your bracket and state. The calculator above computes the exact figure for your situation and compares selling now vs. holding through the long-term capital-gains threshold.
All Character.AI tools → · Use the generic NSO Exercise Calculator for any company.
Character.AI equity questions
- How is a Character.AI NSO exercise taxed?
- Exercising a non-qualified stock option (NSO) creates ordinary income on the bargain element (the price on the day you exercise minus your strike), subject to federal income tax, state income tax, and FICA. The calculator above computes that tax for your Character.AI grant and compares selling the shares now against holding past the one-year mark for long-term capital-gains treatment.
- Does Character.AI grant ISOs, NSOs, or RSUs?
- Equity compensation at Character.AI typically takes the form of incentive stock options (ISOs) and non-qualified stock options (NSOs). Incentive stock options can trigger the alternative minimum tax (AMT) when you exercise.
- Are Character.AI shares eligible for QSBS?
- They might be. Qualified small business stock (QSBS) under Internal Revenue Code Section 1202 can exclude federal tax on much of the gain when shares were acquired at original issuance from a C-corporation while its gross assets were under $50 million, and held at least five years. Whether your Character.AI shares qualify turns on when you acquired them and the company's asset size at that time.
One piece of the puzzle.
OptionsAhoy plans your Character.AI equity alongside hedging, vesting, and de-concentration, across bullish, neutral, and bearish market scenarios. Free during beta.