Plan your NSO exercise

Calculator · free · no signup

Calculate the payout on exercising your Non-qualified Stock Options (NSOs), then compare selling now vs. holding for long-term capital gains.

Beta · invite-only · AlphaLatitude Inc. · Free Tools

Your grant

pre-IPO? enter price manually

Tax inputs

Hold strategy

1 yr
20%
20%
10.0%

Best after-tax payout — at year 1

$199,080

Sell + invest wins by $20,783 over Hold 1 yr.

Estimates only. Not financial advice.

Your NSO exercise pushes your top federal rate from 24% to 35%. Hover the Federal value below for the bracket-by-bracket slicing.

Sell + invest

Best payout
Bargain element (sale − strike)$350,000
Federal
State
Medicare−$5,075
Additional Medicare−$3,150
Market gain over 1 yr at 10.0%$18,573
LTCG on diversified gain (fed + state + NIIT)−$5,219
Net at year 1$199,080

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$178,297

Sold 2,678 shares at exercise to cover strike + tax; 2,322 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

Sell + investExercise + hold
$0$54K$108K$162K$216KYr 1Yr 2

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.

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What this calculates

  • Federal, state, and FICA tax on the gain when you exercise NSOs (non-qualified stock options): ordinary income, not capital gains.
  • How the gain stacks with your salary and bonus to push your marginal tax rate up.
  • FICA only applies while you're still at the company.
  • Cash-fund the exercise vs. sell-to-cover (sell enough shares at exercise to cover the tax bill).
  • Sell at exercise vs. hold 12 months for the long-term capital-gains rate.

QSBS §1202 early-exercise strategies are out of scope.

Read the deep dive: Six NSO mistakes your tax advisor probably won't mention →

Methodology

Optimization. Computes the after-tax payout on an NSO exercise (federal, state, FICA), then projects sell-now-vs-hold-for-LTCG year-by-year through your chosen horizon and surfaces the higher-net outcome. The search is deterministic: the same inputs return the same answer, so the recommendation is verifiable.

Tax-code coverage. Full federal code (ordinary brackets, long-term capital gains, AMT with credit recovery, FICA, Net Investment Income Tax) plus all 50 states and DC for state ordinary brackets and LTCG treatment. State AMT modeled for CA, CO, CT, MN. Brackets reflect IRS Rev. Proc. 2025-32 and the One Big Beautiful Bill Act (OBBBA) provisions for tax year 2026. Validated against 870+ unit tests covering bracket math, AMT credit recovery, state conformity, and the optimizer's search path.

Why use an optimizer rather than asking an LLM to do the math: a benchmark of five frontier large language models on the same multi-year ISO problem found that all 15 trials overshot the achievable after-tax outcome by 2x to 20x (HackerNoon write-up).

AI assistant integration

Use this from Claude, Cursor, or VS Code

Ask your agent:

“I exercised 1,000 NSOs at $10 strike, FMV $50. Should I sell now or hold a year for long-term capital gains?”

With the OptionsAhoy MCP installed, your agent calls nso_calculate and returns the same after-tax answer this calculator computes.

Add to CursorAdd to VS CodeAll install options →
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You modeled one exercise. The beta plans the full schedule.

OptionsAhoy times every NSO exercise across years, jointly with ISO timing, RSU vests, hedges, and sales, weighted by bullish, neutral, and bearish scenarios. Free during beta.

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