Tax
What is Ordinary Income?
Income taxed at standard graduated rates - including salary, NSO exercise spread, and RSU vests.
Ordinary income covers wages, business income, NSO exercise spreads, RSU vests, and short-term capital gains. It's taxed at federal graduated rates (10% to 37% in 2026) plus state tax. For high earners, the combined federal + state rate can exceed 50%. The contrast: long-term capital gains and qualifying ISO sales get preferential rates (0/15/20% + 3.8% NIIT), saving 15-25 percentage points. The structure of your equity events determines how much falls under ordinary vs LTCG treatment.