NSOs (Non-Qualified Stock Options)

Non-Qualified Stock Options (NSOs) are a type of employee benefit that grants the right to buy company stock at a set price, usually lower than market value. When you exercise the option, meaning you purchase the shares, the difference between the purchase price and the current market price is taxed as ordinary income. NSOs are typically offered to employees, consultants, and directors, and they don’t qualify for special tax treatment like Incentive Stock Options (ISOs). They are a way for employees to share in the company's success, with potential financial gains if the company's stock value rises.