Efficiently Maximize Gains With Tax Planning For Stock Options

The Importance of Timing

One of the key strategies in tax planning for stock options is timing. Exercising options when the market price is favorable can lead to significant savings. For ISOs, holding the shares for at least one year after exercising and two years after the grant date can qualify the gains for long-term capital gains tax rates, which are lower than ordinary income tax rates². This timing strategy can be the difference between paying a 37% tax rate versus a 20% rate.