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ESPP Tax Calculator
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ESPP Tax Calculator
This ESPP tax calculator estimates taxes on a completed stock sale or compares what you may owe in common scenarios.
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14 years of experience Expertise Financial advisors employee equity 529 plansTaryn Phaneuf is a lead writer & content strategist covering wealth management, financial planning and other investing topics at NerdWallet. She previously reported on personal finance news. Prior to joining NerdWallet, she spent more than a decade covering education, public policy and business for various news outlets. She also taught journalism as an adjunct instructor at her alma mater, the University of Minnesota.
Taryn Phaneuf is a lead writer & content strategist covering wealth management, financial planning and other investing topics at NerdWallet. She previously reported on personal finance news. Prior to joining NerdWallet, she spent more than a decade covering education, public policy and business for various news outlets. She also taught journalism as an adjunct instructor at her alma mater, the University of Minnesota.She lives in Minnesota.
She lives in Minnesota. Published in Lead Writer & Content Strategist + more + more
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19 years of experience Expertise Retirement planning investment management investment accountsArielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia. Published in Head of Content, Investing & Taxes + more + moreEmployee stock purchase plans, or ESPPs, allow employees to purchase company stock at a discount. This lets employees share in the success of the company. But this form of equity compensation comes with its own set of tax rules. Our tax calculator can help you get an idea of what that could mean for you.
Employee stock purchase plans, or ESPPs, allow employees to purchase company stock at a discount. This lets employees share in the success of the company. But this form of equity compensation comes with its own set of tax rules. Our tax calculator can help you get an idea of what that could mean for you.ESPP taxes generally apply to two factors:
ESPP taxes generally apply to two factors:The price discount you may have received through the ESPP when you bought the shares.
The price discount you may have received through the ESPP when you bought the shares.Profits from the sale of shares you purchase through the ESPP.
Profits from the sale of shares you purchase through the ESPP.» Need the basics? What to know about ESPPs
» Need the basics? » Need the basics? What to know about ESPPsESPP tax calculator
ESPP tax calculatorUse the calculator below to estimate taxes on a completed stock sale or compare what you may owe under common scenarios.
Use the calculator below to estimate taxes on a completed stock sale or compare what you may owe under common scenarios.The calculator prompts you to enter the marginal income tax rate and the capital gains tax rate that apply to you based on your taxable income. The other necessary information should be available through your ESPP administrator.
The calculator prompts you to enter the marginal income tax rate and the capital gains tax rate that apply to you based on your taxable income. The other necessary information should be available through your ESPP administrator.How to use the ESPP tax calculator
How to use the ESPP tax calculatorTo estimate ESPP taxes under common scenarios, you need several key details.
To estimate ESPP taxes under common scenarios, you need several key details.Stock price on the offering date: The offering date is the start of your plan’s offering period. It may also be called the grant date or the enrollment date.
Stock price on the offering date: Stock price on the offering date: The offering date is the start of your plan’s offering period. It may also be called the grant date or the enrollment date.Stock price on the purchase date: The purchase date is the day the ESPP used your accumulated contributions to buy the stock.
Stock price on the purchase date: Stock price on the purchase date: The purchase date is the day the ESPP used your accumulated contributions to buy the stock.Discount: The discount differs from plan to plan, but it can be as much as 15% below market value. The discount you receive when you purchase the stock is recognized as ordinary income when the stock is sold.
Discount: Discount: The discount differs from plan to plan, but it can be as much as 15% below market value. The discount you receive when you purchase the stock is recognized as ordinary income when the stock is sold.Number of shares you purchased. This is the company stock you are buying.
Number of shares you purchased. Number of shares you purchased. This is the company stock you are buying.Price on the sale date: The sale date is the day you sold the stock you purchased through the ESPP.
Price on the sale date Price on the sale date : The sale date is the day you sold the stock you purchased through the ESPP.Marginal tax rate: This is your income tax bracket. The rates are 10%, 12%, 22%, 24%, 32%, 35% or 37%.
Marginal tax rate Marginal tax rate : : This is your income tax bracket. The rates are 10%, 12%, 22%, 24%, 32%, 35% or 37%.Long-term capital gains tax rate: The rates are 0%, 15% or 20%, depending on how long you hold the shares, your taxable income and your tax-filing status. Per the IRS, most people pay no more than 15%.
Long-term Long-term capital gains tax rate capital gains tax rate : : The rates are 0%, 15% or 20%, depending on how long you hold the shares, your taxable income and your tax-filing status. Per the IRS, most people pay no more than 15%.How long you held the stock: Or how long you plan to hold it. The timing determines how the discount and any gains are taxed.
How long you held the stock: How long you held the stock: Or how long you plan to hold it. The timing determines how the discount and any gains are taxed.» Next steps: Do you need a financial advisor? Take the quiz.
» Next steps: » Next steps: Do you need a financial advisor? Take the quiz. AdvertisementGet matched to a financial advisor for free with NerdWallet Advisors Match.
Disqualifying sale vs. qualifying sale
Disqualifying sale vs. qualifying saleThe calculator will label your situation a qualifying or disqualifying sale based on the information you provide. Here’s a look at what that means.
The calculator will label your situation a qualifying or disqualifying sale based on the information you provide. Here’s a look at what that means.Discount tax treatment
Discount tax treatment
Discount tax treatmentGains tax treatment
Gains tax treatment
Gains tax treatmentDisqualifying sale, short-term capital gains
Disqualifying sale, short-term capital gainsWhat gets taxed: The difference between the discounted price you paid and the stock price on the ESPP purchase date.
What gets taxed: What gets taxed: The difference between the discounted price you paid and the stock price on the ESPP purchase date.Tax rate: Ordinary income.
Tax rate: Tax rate: Ordinary income.What gets taxed: The difference between the fair market value of the stock on the purchase date and what you got from the sale.
What gets taxed: What gets taxed: The difference between the fair market value of the stock on the purchase date and what you got from the sale.Tax rate: Short-term capital gains.
Tax rate: Tax rate: Short-term capital gains.Disqualifying sale, long-term capital gains
Disqualifying sale, long-term capital gainsWhat gets taxed: The difference between the discounted price you paid and the stock price on the ESPP purchase date.
What gets taxed: What gets taxed: The difference between the discounted price you paid and the stock price on the ESPP purchase date.Tax rate: Ordinary income.
Tax rate: Tax rate: Ordinary income.What gets taxed: The difference between the fair market value of the stock on the purchase date and what you got from the sale.
What gets taxed: What gets taxed: The difference between the fair market value of the stock on the purchase date and what you got from the sale.Tax rate: Long-term capital gains.
Tax rate: Tax rate: Long-term capital gains.Qualifying sale
Qualifying saleWhat gets taxed: The difference between the discounted price you paid and the stock price on either the ESPP offering date or the ESPP purchase date — whichever is lower.
What gets taxed: What gets taxed: The difference between the discounted price you paid and the stock price on either the ESPP offering date or the ESPP purchase date — whichever is lower.Tax rate: Ordinary income.
Tax rate: Tax rate: Ordinary income.What gets taxed: The difference between the fair market value of the stock on the purchase date and what you got from the sale.
What gets taxed: What gets taxed: The difference between the fair market value of the stock on the purchase date and what you got from the sale.Tax rate: Long-term capital gains.
Tax rate: Tax rate: Long-term capital gains.