The $100K limit: How to protect the tax benefits of your equity grants

The $100K ISO limit (or "$100K rule") is one of the most technical and easily overlooked aspects of equity compensation. 

Incentive stock options (ISOs) and non-qualifying stock options (NSOs) carry different tax obligations for both companies and employees, so understanding how the $100K rule works can help you prevent unexpected tax bills.

Download our guide to the $100k ISO rule

Get to grips with the fundamentals of ISO compliance, including:

  • How to handle single grants, multiple grants, and shifting fair market values

  • The impact of vesting cliffs, early exercise, and altered exercise periods

  • Using ISO/NSO split frameworks to satisfy IRS requirements without recalculating every grant

DISCLAIMER: The following terms apply to your use of this document and your agreement to these terms is required before you are permitted to use this document. This document is provided for your reference only and is not intended to serve as legal, tax, or financial advice. You acknowledge and agree that the making available of this document to you by eShares, Inc. dba Carta, Inc. (“Carta”) shall not constitute the provision of legal service or other professional service by Carta. You should seek advice from an attorney licensed in the relevant jurisdiction(s), tax professionals, accounting professionals, and financial professionals before relying on this document. You further agree and acknowledge that this document has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute tax advice. Relying on this document, you assume all risk and liability that may result.

USE OF THIS DOCUMENT IS ENTIRELY AT YOUR OWN RISK. This document is provided “as is” without warranty of any kind, either express, implied, or statutory, including without limitation, warranties of merchantability, fitness for a particular purpose, satisfactory purpose, title or noninfringement. Some jurisdictions do not allow the exclusion of implied warranties, so these exclusions may not apply to you.

© 2026 eShares, Inc. dba Carta, Inc. All rights reserved. Reproduction prohibited.