Glossary A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 1 | 3 | 4 | 5 Definitions by InvestorWords.com   What is...? Tax Withholding Rate Based on U.S. tax laws, when you exercise stock options, your company will withhold any taxes due from the proceeds of your sale (unless you are exercising Incentive Stock Options, on which there is no withholding). Your company may have already provided a withholding rate for you; if it did not, we will default to a 40% withholding rate. You can modify your withholding rate to better reflect your individual financial picture, but your company will withhold funds from your proceeds based on the information they have about your earnings and tax situation. Tax dollars withheld are calculated like this: (Stock Price ? Grant Price) x Shares Exercised x Tax Withholding Rate Note: Be sure you always consult a tax advisor before you exercise stock options or sell shares to determine how the transaction will impact your tax situation. Copyright ©2009 by InvestorGuide.com. All Rights Reserved.