· Valenx Press  · 2 min read

RSU vs ISO vs NSO: Tax Implications for PM at Google in 2025

FAQ

Is it better to hold RSUs for a year or sell immediately after vesting?
Holding RSUs for at least one year converts the ordinary‑income tax into a long‑term capital‑gain tax, which for a senior PM earning $190 k base plus $150 k equity saves roughly $6 000 after the 2025 rate hike. Immediate sale locks in ordinary‑income rates and forfeits the lower 20 % rate.

Can I convert NSOs to ISOs to avoid AMT?
No, NSOs cannot be re‑characterized as ISOs. The correct judgment is to treat NSOs as ordinary‑income instruments at exercise and plan the exercise date to coincide with the lowest marginal tax bracket, while reserving ISOs for long‑term qualified disposition.

What equity mix should I negotiate if I want to minimize tax risk?
Aim for a 60‑20‑20 split (RSU‑ISO‑NSO) as Google’s senior PMs do. This ratio balances predictable cash flow from RSUs with upside from ISOs, while limiting AMT exposure from NSOs. Negotiating a higher ISO percentage without sufficient cash reserves raises AMT liability and should be avoided.

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