The difference between a qualified incentive stock option (ISO) and a non-qualified incentive stock option (NSO) is how they are taxed, their expiration date, and when taxes are due. ISOs are subject to an alternative minimum tax (AMT) while NSOs are subject to ordinary tax plus payroll taxes. ISOs are only effective while you are employed with the company and up to 90 days after you leave. NSOs don't have such an expiration date and are effective after you leave a company. NSO taxes are due when the options are exercised whereas the AMT portion of ISOs is due during regular annual tax filings.