Equity compensation

What your ESPP sale actually costs you

Part of an ESPP gain is taxed as salary and part as capital gain, and the split depends on when you sold. Worse, the form your broker sends the IRS usually shows the wrong cost basis — which means people pay tax twice on the same money without noticing.

1. The offering

From your ESPP statement. The offering date is when the purchase period started — not the day the shares landed.

Shares sold

Offering / grant date

Share price on the offering date Used for the lookback.

2. The purchase

Purchase date

Share price on the purchase date Market price, before your discount.

What you actually paid per share After the discount. Usually 85% of the lower price.

3. The sale and your rates

Sale date

Sale price per share

Your marginal income tax rate The bracket your salary already puts you in.

Long-term capital gains rate

State tax rate (optional) 0 for TX, WA, FL, NV, TN, SD, WY, AK.

General guidance only, not tax or legal advice. This covers a tax-qualified ESPP under Section 423 with a lookback, which is the common arrangement at US tech employers. Non-qualified plans, plans without a lookback, shares sold in more than one lot, AMT, the net investment income tax and state-specific rules are not modelled here. Nothing you type leaves this browser.