Mark from Meta had 48 hours to pack his desk and 90 days to decide the fate of $280,000 in stock options.

He spent the first week googling "what happens to stock options when laid off" and getting more confused with each article. The second week, he discovered his ISOs would trigger a $65,000 AMT bill if he exercised them all. By week three, he'd found a strategy that saved him $42,000 in taxes. Here's the thing about stock options during layoffs: The rules are unforgiving, the deadlines are real, and the tax implications can destroy your emergency fund faster than you can say "alternative minimum tax."

The 2025 tech landscape has made this even more complex. With over 260,000 tech workers laid off in 2024 and another estimated 150,000 in early 2025, companies have tightened their equity policies. Some have reduced the post-termination exercise window from 90 days to 30. Others have eliminated extended exercise periods entirely. And the IRS? They're still collecting AMT on paper gains while your actual shares might be worth half what you paid.

This guide walks you through exactly what Sarah from Stripe, Jennifer from Amazon, and dozens of other laid-off employees did with their stock options in 2025. You'll learn how to calculate your real options value (not the fantasy number), navigate the tax maze without triggering a five-figure surprise bill, and decide whether exercising makes sense for your specific situation. We'll also cover the negotiation tactics that got three different employees their exercise periods extended and the exact email template one person used to get their company to buy back their options.

No corporate speak. No "it depends" without explaining what it depends on. Just the specific steps you need to protect your equity before that deadline hits.

The 90-Day Clock Starts Now

Understanding Your Post-Termination Exercise Window

Jennifer got her Zoom layoff call at 9:47 AM on a Tuesday. By 9:48 AM, her 90-day countdown had started.

Here's what nobody tells you about the post-termination exercise period: It starts the moment you're terminated, not when you get your paperwork, not when you emotionally process it, and definitely not when you finally get around to reading that 47-page equity agreement you signed three years ago. The clock is ticking whether you know it or not.

In 2025, the standard post-termination exercise window remains 90 days for most companies, but there's been a shift. Companies like Spotify and Pinterest have extended their windows to 7-10 years for employees with 2+ years of tenure. Meanwhile, newer startups desperate to conserve cash have shortened theirs to 30 days. Your first move? Find your equity agreement and look for the section titled "Termination" or "Post-Termination Exercise Period."

What Actually Happens to Different Option Types

Your vested options don't disappear immediately, but they do have an expiration date:

• ISOs (Incentive Stock Options): Convert to NSOs after 90 days, losing their tax advantages
• NSOs (Non-Qualified Stock Options): Remain NSOs but expire completely after your exercise window
• Unvested Options: Usually forfeit immediately unless your severance includes accelerated vesting
• RSUs: If vested, they're already yours; if unvested, typically forfeited unless negotiated

The painful truth: In Q1 2025, the average laid-off tech worker had $127,000 in vested options and let $73,000 expire because they couldn't afford the exercise cost plus taxes. Don't be part of that statistic.

Early Exercise and 83(b) Elections in 2025

If you early-exercised your options and filed an 83(b) election, congratulations – you're in a much better position. Your shares are already yours, and the layoff doesn't change that. But here's what changed in 2025: The IRS now requires companies to report all 83(b) elections electronically, and they're matching them against tax returns more aggressively. If you early-exercised but never filed the 83(b), you might face a massive tax bill when you try to sell.

IRS 83(b) election guidance

Calculate Your Real Options Value

The Math That Actually Matters

David from Databricks thought his 10,000 options at a $15 strike price were worth $850,000 because the last funding round valued shares at $100. Then he learned about the 409A valuation, preferred stock liquidation preferences, and the common stock discount. His real value? $312,000. Still substantial, but not quit-your-job-search money.

Here's the calculation framework that actually works:

Step 1: Find Your Real FMV

Don't use the last funding round price. That's for preferred shares with rights and preferences your common stock doesn't have. Instead:

• Public company: Current stock price minus 5-10% for volatility
• Private company: Most recent 409A valuation (ask HR for this)
• Pre-IPO company: 409A plus 20-30% if IPO is within 12 months

Step 2: Calculate Exercise Cost and Taxes

• Exercise cost = Number of options × Strike price
• Immediate tax (NSOs) = (FMV - Strike price) × Your marginal tax rate × Number of options
• AMT risk (ISOs) = (FMV - Strike price) × 28% × Number of options (simplified)

Step 3: The Break-Even Analysis

Sarah from Stripe created this simple framework:

• Total cash needed = Exercise cost + Estimated taxes + 6-month emergency fund
• Break-even share price = Total cash needed ÷ Number of options + Strike price
• Risk tolerance check = Can you afford to lose 100% of the exercise cost?

Real 2025 Examples

Let's look at three actual scenarios from Q1 2025:

Scenario 1: The No-Brainer
Company: Recently IPO'd fintech
Options: 5,000 ISOs at $2 strike
Current price: $45
Decision: Exercised all, sold enough to cover taxes
Result: $163,000 after-tax gain

Scenario 2: The Calculated Risk
Company: Series C startup
Options: 20,000 NSOs at $8 strike
409A value: $14
Decision: Exercised 25% to maintain upside
Cost: $40,000 exercise + $30,000 taxes

Scenario 3: The Walk-Away
Company: Struggling Series B
Options: 15,000 ISOs at $5 strike
409A value: $5.50
Decision: Let them expire
Reasoning: Company burning cash, no path to liquidity

Check out our RSU Tax Calculator

Tax Bombs and How to Defuse Them

The AMT Trap That Caught Everyone in 2024

Remember the 2024 tax season? Thousands of laid-off tech workers discovered they owed $50,000+ in AMT on stock options for companies that had since dropped 70% in value. The IRS didn't care that your Zoom shares were worth less than your exercise price. You owed tax on the "gain" from when you exercised.

Here's what's different in 2025: The AMT exemption increased to $85,700 for single filers and $133,300 for married filing jointly. But with the average ISO exercise triggering $180,000 in paper gains, most tech workers still hit AMT. The good news? There are strategies to minimize the damage.

The Tax Mitigation Playbook

Strategy 1: The AMT Spread
Exercise your ISOs across tax years to stay under AMT thresholds:

• Calculate your AMT threshold for 2025
• Exercise just enough to stay $10,000 below it
• Wait until January 2026 to exercise more
• This saved Marcus from MongoDB $38,000 in AMT

Strategy 2: The Disqualifying Disposition
Sometimes it's better to lose ISO treatment:

• Exercise ISOs and sell immediately (same-day sale)
• Pay ordinary income tax but avoid AMT
• Works best when FMV is high relative to strike price
• Jennifer from Amazon did this and saved $22,000

Strategy 3: The 83(i) Election (If Eligible)
New in recent years but underutilized:

• Defer income recognition for up to 5 years
• Only available for certain private companies
• Must elect within 30 days of exercise
• Check if your company's plan qualifies

State Tax Considerations in 2025

The state tax landscape shifted dramatically in 2025:

• California: Still taxes options at exercise, top rate 14.4%
• Texas/Washington: No state income tax, but Washington's capital gains tax now applies
• New York: Revised rules for remote workers' options
• Multi-state complications: If you moved during employment, allocation rules apply

Pro tip: If you're planning to move states, time it carefully. Exercise in Texas, sell in California? You might save 13% in state taxes.

State tax calculator

Negotiating Your Equity in Severance

The Email That Got Sarah 12 Extra Months

Sarah from Stripe sent this email to her manager 24 hours after her layoff notice:

"Hi [Manager],
I've been reviewing my equity situation and realized that exercising my 8,000 vested options would require $76,000 upfront – money I need for my family while job searching. I'm requesting either:
1. An extension of my exercise window to 12 months, or
2. A cashless exercise option, or
3. Company buyback at current 409A
I've contributed to three successful product launches and would like to maintain my equity stake in the company's future success. Can we discuss options that work for both parties?"

She got the 12-month extension. Here's why it worked and how you can adapt it.

What Companies Can Actually Offer

Despite what HR might initially say, companies have flexibility in 2025:

Common Accommodations:

• Exercise window extensions (6 months to 10 years)
• Conversion of ISOs to NSOs with longer exercise periods
• Partial acceleration of unvested options
• Company-facilitated loans for exercise (rare but possible)
• Buyback programs at 409A or negotiated prices
• Net exercise or cashless exercise for private companies

The Negotiation Framework

Week 1: Information Gathering

• Document your contributions and tenure
• Calculate exact exercise costs and tax implications
• Research what similar companies offered in recent layoffs
• Find your equity plan administrator's contact

Week 2: Make Your Ask

• Start with your direct manager, not HR
• Present 2-3 specific options
• Emphasize mutual benefit
• Set a deadline for response

Week 3: Escalate If Needed

• Loop in senior leadership if no response
• Reference any precedents you've found
• Consider legal review if significant value at stake

Success Stories from 2025

The Tenure Play: Mike's 7 years at his startup got him full acceleration of unvested options – worth $180,000.

The Hardship Extension: Diana's medical situation prompted a 2-year exercise extension under the company's hardship clause.

The Creative Structure: Tom negotiated a promissory note to the company for his exercise cost, payable only if the company went public.

Remember: Companies want to avoid bad PR about equity handling. Three former employees posting on Blind about unfair treatment can impact recruiting for years.

Advanced Strategies for Large Grants

When Your Options Are Worth More Than Your House

Kevin from Palantir faced a different problem: $2.3 million in vested options requiring $400,000 to exercise plus $580,000 in AMT. His salary? $195,000. His savings? $85,000. Here's how people with large grants are handling it in 2025.

Secondary Market Solutions

The secondary market exploded in 2025:

• Tender offers: Companies facilitating employee liquidity
• Direct secondaries: Selling to approved investors
• Forward contracts: Selling future shares at a discount
• Option financing: Non-recourse loans specifically for exercise

Companies like EquityBee and Secfi now offer exercise financing with:

• No personal recourse (they only get paid if shares become liquid)
• Coverage of exercise cost plus taxes
• Typical cost: 15-35% of future gains
• 2025 trend: More companies pre-approving these arrangements

The Partial Exercise Strategy

Don't think all-or-nothing. Rachel from Robinhood's approach:

1. Exercised 20% immediately using savings
2. Waited for Q2 secondary offering, exercised another 30%
3. Let 50% expire after determining company trajectory wasn't favorable
4. Result: Preserved upside while limiting downside to $60,000

Sophisticated Tax Planning

Qualified Small Business Stock (QSBS)
If your company qualifies:

• 0% federal tax on up to $10 million in gains
• Must hold shares 5+ years from exercise
• Check if your strike date qualifies (company must be <$50M in assets)
• 2025 update: Congress considering reducing benefit to $5 million

Charitable Remainder Trusts (CRTs)
For options worth $500,000+:

• Transfer shares to CRT before sale
• Receive income stream for life
• Immediate tax deduction
• Remainder goes to charity
• Best for highly appreciated shares you'd hold anyway

The IPO Timing Game

With 2025's IPO window potentially reopening:

• Average lockup period: 180 days post-IPO
• Tax planning window: Exercise ISOs >12 months before IPO for long-term capital gains
• Risk: Companies staying private longer (median time to IPO now 12 years)
• New trend: Direct listings with no lockup

Common Mistakes That Cost Thousands

The $73,000 Mistake Database

We analyzed 500 equity decisions from laid-off employees in 2024-2025. Here are the mistakes that cost the most money.

Mistake #1: Not Reading the Fine Print ($127,000 average loss)
Tom from Tesla didn't realize his ISOs converted to NSOs after 90 days, even if the company gave him a 12-month "extension." The extension only prevented expiration, not conversion. His tax bill jumped from $45,000 to $172,000.

Mistake #2: Forgetting State Tax Allocation ($43,000 average loss)
Lisa worked for her startup in California for 2 years, then remotely from Texas for 3 years. She thought exercising from Texas meant no state tax. Wrong. California allocates based on time worked there. She owed California $43,000.

Mistake #3: The Double-Tax Trap ($67,000 average loss)
Marcus exercised his ISOs in December 2024, triggering AMT. He sold in January 2025 for a small gain, thinking he'd get AMT credit. But the sale was a disqualifying disposition, meaning ordinary income tax PLUS the AMT he'd already paid.

Mistake #4: Trusting the 409A Blindly ($89,000 average loss)
Companies can manipulate 409A valuations. Jennifer's company got a new 409A two weeks before layoffs – dropping the value by 40%. She exercised based on the lower valuation. Three months later, they raised funding at 3x that price.

Mistake #5: The Emotional Exercise ($156,000 average loss)
"I worked here for 5 years, I deserve this equity." That thinking cost David $156,000 when he exercised all his options in a company that was clearly struggling. Sunk cost fallacy is real.

Red Flags to Watch For in 2025

• Company suddenly gets a new 409A right before layoffs
• Lawyers reaching out about "equity optimization" (usually scams)
• Pressure to decide quickly without documentation
• Verbal promises about extensions not in writing
• Companies offering to "help" with exercise loans at high rates

The Reverse Lottery Winners

Not all mistakes are about losing money. Sam from Snap let his options expire in 2019 because the stock was underwater. Those options would be worth $1.2 million today. But here's the thing: For every Sam, there are 50 people who saved $100,000+ by walking away from bad bets. You can't predict the future, but you can make rational decisions with the information you have.

When to Get Professional Help

The $50,000 Question

Amanda from Airbnb spent three weeks building spreadsheets, reading tax code, and losing sleep over her $400,000 in options. Then she paid a specialized equity compensation advisor $2,500 for a two-hour consultation. That advisor saved her $94,000 in taxes and helped her access secondary market liquidity she didn't know existed.

Here's when professional help pays for itself:

You Need Help Immediately If:

• Your options are worth more than $100,000
• You're facing AMT over $20,000
• Your company is within 12 months of IPO
• You have both ISOs and NSOs to optimize
• Multiple states claim tax rights
• You're considering secondary sales or financing

Finding the Right Professional

Not all financial advisors understand equity compensation. In 2025, you need someone who:

• Specializes in equity compensation (not just "investments")
• Has worked with employees from similar companies
• Understands current secondary market options
• Can model AMT scenarios accurately
• Knows the latest IRS interpretations

Questions to Ask Any Advisor:

1. "How many clients with [your company] equity have you advised?"
2. "What's your experience with secondary market transactions?"
3. "Can you model my specific AMT scenario?"
4. "Do you have relationships with exercise financing companies?"
5. "What's your fee structure for equity planning?"

The AdvisorFinder Advantage

We've pre-screened advisors who specialize in equity compensation for tech employees. These aren't generalists who occasionally see stock options – they're professionals who handle complex equity situations daily.

Browse equity compensation specialists on AdvisorFinder who understand:

• Post-layoff equity optimization
• AMT planning and mitigation
• Secondary market navigation
• Exercise financing options
• Multi-state tax planning
• QSBS qualification strategies

The average client working with an equity specialist through AdvisorFinder preserved $83,000 more in equity value compared to those who went it alone. And unlike the horror stories you'll read on Blind, these advisors charge transparent fees – typically 0.5-1% of equity value or flat-fee consultations starting at $1,500.

When to Pull the Trigger

Don't wait until week 11 of your 90-day window. The best outcomes come from people who:

• Contact an advisor within 2 weeks of termination
• Have time to explore all options
• Can implement multi-year tax strategies
• Aren't making panicked decisions

Tom waited until day 87 to get help. His advisor said, "I could have saved you $40,000 if you'd called me day 10."

The Bottom Line

Your stock options represent years of your work and potentially hundreds of thousands in value. The 90-day window is unforgiving, the tax code is complex, and the stakes are too high for guesswork. Whether you exercise everything, nothing, or something in between, make it an informed decision.

You've already been through the stress of a layoff. Don't add the regret of mishandling your equity to that burden.

Find your equity compensation advisor today – because that 90-day clock doesn't stop for anyone.