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Question

ISO vs. NSO — what is the difference?

Answer

When comparing ISOs to NSOs (non-qualified stock options), the primary difference lies in taxation. ISOs may qualify for favorable long-term capital gains rates if specific holding periods are met, whereas NSOs are generally taxed as ordinary income upon exercise.

Related FAQs

Where can I find guidance on incentive stock option timing?

How do I exercise my incentive stock options?

What is an incentive stock option?
Professions Tax Planning Stocks Mutual Funds ETFs Tax Basics Concentrated Stock Building Wealth IPOs & Recapitalization Investors Corporate Executives Diversification Exec Compensation FAQs
Last Updated June 18, 2026
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