Something to readCompensation
Consider Your Options
A plain-language handbook on US taxes for stock options, RSUs and employee stock purchase plans
Why it’s worth your time
Consider Your Options explains the US tax rules that come with equity pay, which can be expensive to learn for the first time at the deadline. Kaye Thomas's handbook, now in its tenth edition, walks through those rules for each kind of equity an employee might hold, from restricted stock to incentive options and purchase plans.
How equity compensation is taxed
The book · About 5 hours of reading · Buy or borrow
How to get it
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- Start with Part I, then the part that matches your equity.
Part I is the overview, including working with or without an advisor. Then go to the part for what you actually hold: restricted stock, nonqualified options, incentive options and the alternative minimum tax, or employee stock purchase plans. Part VII on vesting covers the section 83(b) election and early exercise.
- Write down your next decision and its deadline.
From the part you read, name the one decision your equity will ask of you this year, such as whether to make an 83(b) election, when to exercise, or whether to sell purchase-plan shares before a holding period ends. Write the date it's due and a date a few weeks earlier to start looking at it.
Good moments for this: after a job change that brings new equitybefore a vesting or exercise datewhen a tax bill on equity surprises you
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Making it work for you
Every workplace is different. Here’s what to think about before you start, and what might get in the way.
Things to think about
The amount withheld may also not match what you owe: for RSUs, US employers often withhold federal income tax at the optional flat 22 percent rate for supplemental pay (37 percent on any amount over $1 million in a year), which can fall short for anyone whose top bracket is higher and leave a bill at filing time. Your pay stub and last year's return can show whether that's been happening to you.
What might make this harder
Read Thomas's part on vesting first. The election has to be filed within 30 days of receiving the stock, so book any time with a tax professional inside that window rather than after it.
Questions people ask
What is Consider Your Options about?
It's Kaye Thomas's plain-language guide to the US tax rules for equity compensation, published by Fairmark Press, the author's own press. It's organized in nine parts, mostly by type of equity: restricted stock, nonqualified and incentive stock options, using stock to exercise options, vesting and the 83(b) election, and employee stock purchase plans, plus planning topics such as estimated tax.
Which edition of Consider Your Options should I read?
The newest you can get. The 2023 edition, published in December 2022, is the tenth and covers developments through 2022. Tax rules change, so anything enacted since won't be in it, and an older library copy may be further out of date.
What is a section 83(b) election?
A choice available when you receive stock that hasn't vested yet. Within 30 days, you can elect to report the stock's value as income when you receive it, instead of reporting income as it vests. It can help when the value is low at the start, and it can backfire if the stock loses value or you leave before vesting.
How are RSUs taxed?
In the US, RSUs are usually taxed as ordinary income when they vest, on the shares' value that day. If you keep the shares and sell later, any change in value from that point is a capital gain or loss.
What it says, and how it holds up
Equity tends to arrive with a grant agreement, a portal login and very little about the tax that comes with it. Thomas's book fills that gap with a reference organized by what you hold, starting from restricted stock and working toward incentive options, which Thomas's free primer says come with great complexity. That primer says you can skip around, but that the rules build on each other to some extent: incentive options on nonqualified options, and those on the rules for getting stock from an employer. The author's page says the book is written for newcomers but detailed enough for advisors, and Fairmark.com's equity compensation pages, the primer among them, are a free way to try the explanations first.
A tax handbook ages by the year, which is why this one is reissued. The current edition reflects rules through 2022, and Congress has changed parts of the tax code since, so it's worth checking any rule you plan to rely on against the IRS's own pages for the year you file. The book's subject is US tax rules; state tax, and any time you've lived or worked in another country while holding equity, add layers worth checking separately.
Rules are one question and what to do with your shares is another. If RSUs have piled up over a few years until much of what you own is your employer's stock, the book can explain the tax rules around those shares. Whether to sell is a separate question, tied to the rest of your finances. A fee-only financial planner is better placed to help with that than any handbook. This explains how things usually work; it isn't financial, tax or legal advice for your situation.
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Picked by Truest and described in our own words. The original belongs to its creator. Last updated October 9, 2026. We sell a career membership; where that’s relevant above, we say so.