How Stock Options Are Taxed in 2026

Stock options are a common form of compensation, but their tax treatment is anything but simple. In this episode, Lucas and Luna break down the difference between incentive stock options (ISOs) and non-qualified stock options (NSOs), focusing on the alternative minimum tax (AMT) trap that can catch employees off guard. Using a concrete example of an employee exercising ISOs at a steep discount, they explain how the bargain element triggers AMT, potentially creating a six-figure tax bill even without selling any shares. They also discuss strategies to avoid the AMT, such as early exercise, 83(b) elections, and coordinating with vesting schedules. With the 2026 tax landscape shaped by expiring TCJA provisions, understanding these rules is more important than ever for anyone with equity compensation. This episode is a must-listen for startup employees, tech professionals, and anyone navigating stock option taxation. #TaxPolicy #StockOptions #EquityCompensation #AMT #IncentiveStockOptions #NonQualifiedStockOptions #EmployeeCompensation #TaxPlanning #Finance #Economics #FexingoBusiness #BusinessPodcast #FexingoTax #TaxTips #WealthManagement #IPO #StartupCompensation #TaxStrategy Keep every episode free: buymeacoffee.com/fexingo