Non-Qualified Stock Options (NSOs)

Non-Qualified Stock Options (NSOs) are a type of employee benefit that allows workers to buy company stock at a set price, known as the exercise price, often lower than the market price. Employees typically receive NSOs as part of their compensation package. When they decide to exercise these options, they can purchase shares and potentially make a profit if the stock's market price is higher than the exercise price. However, unlike Qualified Stock Options, NSOs are subject to regular income tax at the time of exercise, rather than capital gains tax, which can result in a different tax treatment.