You are taxed on your capital gains, as with any stock you purchase. Capital gains tax applies on the amount of your gains above your tax basis after exercise. Long-term capital gains rates apply when you hold the stock more than one year after exercise.
Example: Your exercise price is $12, the market price (used to calculate the spread at exercise) is $18, and you sell the stock when the price is $26. You have $6 per share ($18 - $12) of ordinary income at exercise and $8 ($26 - $18) of capital gains at sale. The capital gains are taxed at 15% or 20%, depending on your income.
On your tax return, you report capital gains with Form 8949 and Schedule D of IRS Form 1040. For details, including annotated examples for sales of NQSO stock, see the Tax Center.