ESPP TAX CALCULATOR · RUNS IN YOUR BROWSER · NOTHING UPLOADED

Sell your ESPP shares now, or hold for the tax break?

An employee stock purchase plan buys stock at a discount. Selling right away taxes that discount as wages; waiting for a qualifying sale cuts the tax but leaves you holding your employer's stock. Enter your plan's numbers to see the after-tax result of each choice and the price below which waiting loses.

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1. Your plan

2. Your taxes and your plan for the shares

Fill in the boxes above, then click Compare sell now and hold.

How it is calculated

The price you pay is the plan discount off the lower of the offering-date and purchase-date prices with a lookback, or off the purchase-date price without one. Disqualifying sale (before two years from the offering start or one year from purchase): ordinary income is the purchase-date price minus the price paid; the capital gain or loss is the sale price minus the purchase-date price, long-term only if held over a year after purchase. Qualifying sale: ordinary income is the smaller of the actual gain and the discount at the offering-date price (never below zero); the rest is long-term capital gain or loss. Ordinary income and short-term gains use your marginal rate; long-term gains use your capital gains rate. Capital losses first cancel your other gains, then deduct up to $3,000 against wages; anything left is carried forward and valued at zero here. The breakeven price is found by search: the sale price at which holding to the qualifying date leaves exactly what selling at purchase would.

Not modelled: state-specific rules, AMT, wash sales, non-US and non-qualified plans, employer timing rules, brackets that shift as the income grows (you enter one rate), and years beyond the sale. Unverified: checked by hand calculation and unit tests, not against Form 8949 or a tax preparer.

Common questions

Is my ESPP sale taxed as ordinary income or capital gains?

Both, in a split that depends on when you sell. In a qualifying sale (at least two years after the offering period began and one year after purchase), ordinary income is the smaller of your actual gain and the discount measured at the start of the offering period, and the rest is long-term capital gain. In a disqualifying sale, the discount at the purchase date (market price minus what you paid) is ordinary income and the rest is a capital gain or loss.

Should I sell my ESPP shares right away or hold them?

Selling at purchase locks in the discount and removes the stock price risk, and is taxed as ordinary income. Holding to a qualifying sale gets lower tax but exposes you to the price for 12 to 24 months. This tool computes the price below which waiting leaves you with less after tax than selling now, so you can weigh the tax saving against the risk.

What is a lookback and why does it matter?

With a lookback the plan applies the discount to the lower of the price on the first day of the offering period and the price on the purchase date. If the stock rose, you buy at a price well below the market, which raises the immediate gain and the ordinary income on a same-day sale.

What is a qualifying disposition?

A sale made at least two years after the first day of the offering period and at least one year after the purchase date. With a six-month offering period that is 18 months after purchase; with a 24-month offering period it is 12 months.

Why does my 1099-B show the wrong cost basis?

Brokers usually report the price you paid as your basis, but the discount was already taxed as wages, so your true basis is higher. Add the ordinary income to the basis on Form 8949 (adjustment code B). If you skip it, you are taxed twice on that amount. The tool shows how much that mistake would cost.

What is the $25,000 ESPP limit?

A qualified plan may not let you buy more than $25,000 of stock a calendar year, counted at the price on the first day of the offering period. The tool warns when shares times that price is above the limit.

What happens if the price drops after I buy?

In a disqualifying sale you still owe ordinary income on the discount at purchase even if you sell for less, and the loss is a capital loss that first cancels other gains and then deducts only $3,000 a year against wages. That asymmetry is why a price fall hurts more than the tax saving from waiting helps.

What does this tool leave out?

State-specific rules, the alternative minimum tax, the net investment income tax unless you include it in your rate, Section 423 plans outside the US, non-qualified plans, employer-specific timing rules, wash sale rules and carried-forward losses beyond the year. It uses the rates you enter.

Is my information uploaded anywhere?

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