Federal tax on exercising non-qualified stock options and selling the shares
Estimates only, not financial advice. What you type stays on your device. Checked against sources on 29 Sept 2026.Exercising a non-qualified stock option makes the spread, the share price minus the exercise price, ordinary wages. Your employer usually withholds a flat 22% federal tax on it, or 37% above $1 million of supplemental wages, which is often less than your bracket. Enter the shares, the price and your other income to see the real tax, the shortfall and the tax when you sell.
$300
Real tax $3,600 (24% of $15,000) against $3,300 withheldFederal only: no state or local tax, no AMT. Tax from the 2026 rate schedule. An estimate, not tax advice.
| 100 × ($200 − $50) | $15,000 |
| Withheld at 22% | $3,300 |
| Tax it really adds, 24% to 24% brackets | $3,600 |
| Shortfall | $300 |
| Social security 6.2% up to the $184,500 wage base | $899 |
| Medicare 1.45%, plus 0.9% withheld on wages over $200,000 | $218 |
Rates and rules read from the sources listed on this page (the earliest on 29 Sept 2026); they may have changed since.
"Non-qualified options (NSO)" is already selected under "Equity".
Enter "Options exercised", the "Share price at exercise" and the "Exercise (strike) price".
Pick your "Filing status" and enter your other taxable income, wages and bonuses for the year.
Read "Wages from the spread" and the amount still owed at filing on the exercise, then open "At sale" for the tax when you sell.
Restricted stock units are taxed twice, at two different moments. This calculator follows both, for tax year 2026 or 2025, using the federal rate tables and withholding rules the IRS publishes.
At vest: wages. The number of shares times the fair market value on the vest date is ordinary income, reported on your W-2. Your employer withholds federal income tax at the flat supplemental rate: 22%, or 37% on supplemental wages above $1 million in the calendar year. The calculator then works out the tax the vest really adds on top of your other taxable income. If your bracket is 24% or higher, the gap between the two is tax you still owe in April, and the page shows it as the shortfall. Social security (6.2% up to the wage base, $184,500 for 2026) and Medicare (1.45%, plus 0.9% withheld above $200,000 of wages) are shown too.
Stock options. Choose NSO to tax the spread at exercise instead of the full share value. Incentive stock options (ISOs) are not modelled: they create no regular tax at exercise but can trigger alternative minimum tax, which depends on your whole return.
The rest of the article, and all 6 questions about RSU Tax Calculator, are on the RSU Tax Calculator page.
The shares that vest, times their market value on the vest date, are ordinary wages. They appear on your W-2 and are taxed at your normal federal bracket, plus social security and Medicare. Employers usually sell or hold back some shares to cover the withholding, which is typically a flat 22% federal rate.
Federal withholding on supplemental wages is a flat 22% up to $1 million a year, per Publication 15. If your other income puts the vest in the 24%, 32% or 35% bracket, 22% is not enough, and the difference is due with your return. The calculator shows that shortfall in dollars.
The basis is the market value on the vest date, the amount already taxed as wages. When you sell, only the price change since the vest is a capital gain or loss. Brokers often report the basis on Form 1099-B as zero, so adjust it on Form 8949 or you pay tax twice.
No. Exercising an incentive stock option creates no regular income tax, but the spread counts for the alternative minimum tax, which depends on the whole return. The calculator covers RSUs and non-qualified options, where the value is ordinary wages. Use tax software or an adviser for ISO and AMT planning.
Rates and rules change; check the source before you rely on a figure.
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