when you declare your income you subtract your cost basis from the sale price. In 1 you paid $10 and sold for $100 = $90 profit you have to pay taxes on. In 2 y

when you declare your income you subtract your cost basis from the sale price. In 1 you paid $10 and sold for $100 = $90 profit you have to pay taxes on. In 2 you paid $35 and sold for $100 = $65 profit. It isn't the time at which you exercise that makes the difference, it is the higher strike price. EDIT: to be clear, 1 and 2 refer to the original differences in the first post. If we are comparing different exercise time with the same strike price, then the taxes are nominally the same (Because the income tax % you pay depends on your income, you might be able to save money by exercising in a year when your income is low).