Silicon Valley Self Regulation

Non-Qualified Stock Option (NSO)

photo by markus spiske

photo by markus spiske

Non-Qualified Stock Option (NSO)


A Non-qualified Stock Option (NSO) tax structure is a much more common and much simpler alternative to ISOs wherein employees pay income tax on the difference between the grant price and the exercise price. This employee stock option is called a non-qualified stock option because it doesn’t meet the IRS qualifications for an ISO.

helpful resources

Options Tax Calculator at Springmeyer Law

Joe Wallin's Incentive Stock Options vs. Nonqualified Stock Options at Startup Law Blog

Ian Artinger's NSOs Vs. ISOs – What’s the Difference? at Capshareblog

Tyler Hollenbeck's Understanding the differences between an ISO vs. NSO at The Venture Alley

Dave Naffziger's Startup Stock Options: ISOs vs. NSOs at Dave Naffziger's blog

Zibbie Nwokah's Equity 101 for Startup Employees (Part 3: Exercising and Taxes) at eShares