Calculator Inputs
Example Data Table
| Input | Example Value |
|---|---|
| Shares | 1,000 |
| Strike Price | $5.00 |
| Fair Market Value at Exercise | $20.00 |
| Sale Price | $35.00 |
| Federal Ordinary Tax Rate | 32% |
| Capital Gains Tax Rate | 15% |
| State Tax Rate | 5% |
| Payroll Tax Rate for NSO | 1.45% |
| Estimated AMT Rate | 28% |
| Exercise Fee | $100.00 |
| Broker Fee Rate | 1% |
| Qualifying ISO Disposition | Yes |
Formula Used
1. Exercise Cost
Exercise Cost = Shares × Strike Price
2. Exercise Cash Needed
Exercise Cash Needed = Exercise Cost + Exercise Processing Fee
3. Sale Proceeds
Sale Proceeds = Shares × Sale Price
4. Broker Fee
Broker Fee = Sale Proceeds × Broker Fee Rate
5. NSO Ordinary Income
NSO Ordinary Income = max(Fair Market Value at Exercise − Strike Price, 0) × Shares
6. NSO Tax
NSO Tax = Ordinary Income × (Federal Rate + State Rate) + Ordinary Income × Payroll Rate + max(Sale Price − Fair Market Value at Exercise, 0) × Shares × Capital Gains Rate
7. ISO Qualifying Tax
ISO Total Tax = max(Sale Price − Strike Price, 0) × Shares × Capital Gains Rate + Estimated AMT Preference × AMT Rate
8. ISO Disqualifying Tax
ISO Ordinary Income = min(max(Fair Market Value at Exercise − Strike Price, 0), max(Sale Price − Strike Price, 0)) × Shares
9. Net Proceeds
Net Proceeds = Sale Proceeds − Exercise Cash Needed − Broker Fee − Total Estimated Tax
How to Use This Calculator
- Enter the number of option shares you plan to analyze.
- Add the strike price and the fair market value at exercise.
- Enter the estimated sale price per share.
- Provide your federal, capital gains, state, payroll, and AMT assumptions.
- Include any exercise fee and broker fee percentage.
- Select whether the ISO sale qualifies for favorable treatment.
- Click the compare button to generate the results above the form.
- Review the table, chart, and download the CSV or PDF summary.
Frequently Asked Questions
1. What does this calculator compare?
It compares estimated after-tax outcomes for incentive stock options and non-qualified stock options using the same share count, pricing, and tax assumptions.
2. Why can ISO results look better?
A qualifying ISO sale may shift more value into capital gains treatment, which can reduce tax compared with NSO ordinary income treatment.
3. Why is AMT shown for ISO?
ISO exercises can create an AMT preference based on the spread at exercise. This tool estimates that effect with a simple rate input.
4. Does the calculator include payroll taxes?
Yes. It applies a payroll tax input to the NSO spread. ISO scenarios here do not apply payroll tax in the simplified model.
5. What is a qualifying ISO disposition?
It generally means the shares are sold after meeting required holding periods. That often changes how the gain is taxed.
6. Are losses handled in detail?
No. The calculator focuses on gain-based comparisons and simplified taxes. It does not fully model capital losses, AMT credits, or carryforwards.
7. Should I rely on this for filing?
No. Use it for planning only. Actual taxes depend on timing, withholding, other income, jurisdiction rules, and professional advice.
8. Why add broker and exercise fees?
Fees reduce what you keep. Including them makes the comparison more realistic, especially when exercising large positions or selling immediately.