Tax
Sep. 8, 2026
How stock options and restricted stock are taxed
Stock options and other equity compensation can build significant wealth, but their tax treatment is anything but simple--especially for Californians, where moving out of state may not end state tax obligations.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Stock options sound great, and they are, but what value do they provide, and importantly, how are they taxed? Employees and independent contractors alike see the allure of equity-based compensation. In the tech world, they are especially prevalent. But many workers who offered options or who already have them may not know they are taxed and how they can go awry.
There are several kinds of stock options. Incentive stock options (ISOs) are taxed the most f...
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