Startup equity tax calculator
How much of your equity payout goes to taxes depends on the type of equity, when you exercise, and where you live. Here's how each piece works.
The taxes involved
- Ordinary income tax applies to the NSO spread when you exercise, to RSUs when they settle, and to any option spread when you exercise and sell in the same transaction.
- Long-term capital gains apply to growth on shares you've held more than a year, and to the full ISO gain if you meet the holding periods. Federal rates top out at 20%, plus 3.8% net investment income tax for high earners.
- Alternative minimum tax (AMT) can apply when you exercise ISOs and hold them. The spread at exercise counts as AMT income. Some of this can often be recovered later as an AMT credit.
- State tax ranges from zero (Texas, Florida, Nevada, and others) to over 13% in California, and most states tax capital gains as regular income.
Why the estimates here are rough on purpose
Real tax depends on your salary, filing status, deductions, the year you exercise, and the year you sell. We use flat rates you can adjust (32% federal income, 20% long-term gains, 26–28% AMT on the spread) and a top marginal rate for your state. That's enough to see the size of the tax bite in each scenario and compare paths, but not enough to file with. Every estimate is labeled, and every rate is listed next to the numbers it affects.
RSUs are different
RSUs have no strike price and nothing to exercise. At private companies they're usually “double-trigger”: they vest on schedule, but you're only taxed (as ordinary income) when a liquidity event like an IPO or acquisition happens. Companies typically withhold shares to cover some of the tax, often less than you'll actually owe.
Enter your grant below to see estimated federal, state, and AMT amounts for each exit scenario.
Educational purposes only. Not financial, tax, or legal advice.