Are all stock options taxed the same?

The taxation of your stock options depends on whether they are nonqualified stock options (NQSOs, the more common type) or incentive stock options (ISOs). While ISOs offer the potential for favorable tax treatment, they can trigger the alternative minimum tax. For details on the taxation of stock options, see the sections of this website's Tax Center on NQSOs and ISOs. For the taxation of stock options outside the United States, see this website's Global Tax Guide.

While the tax treatment of stock appreciation rights is similar to that of NQSOs, the taxation of restricted stock, RSUs, performance shares, and employee stock purchase plans is very different. A table summarizing the tax treatment of each grant type is available in another FAQ.