What’s the difference between ISOs and NSOs? Although there are some key differences to be aware of, non-qualified and incentive stock options also have a lot in common. For employees, stock options can offer both risk and reward. Unlike restricted stock units, which are given or “awarded” to employees, incentive stock options and non-qualified stock options must be purchased. Before you exercise your options, it is essential to understand how stock options work and how it may impact your tax situation. What’s the difference between incentive vs non-qualified stock options? This infographic compares the two types of equity compensation.

Infographic: Incentive (Qualified) vs Non-Qualified Stock Options: What’s the Difference?

Here’s how incentive stock options compare to non-qualified stock options including the tax treatment and withholding.

How stock options work

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A Guide for Employees with Stock OptionsFor executives with incentive and non-qualified stock options