ESPP calculator: purchase price, discount, and lookback
Short answer: In a typical Section 423 ESPP, you buy shares at a discount of up to 15% off the stock price. With a lookback, the discount applies to the lower of the price on the offering date or the purchase date. Enter your plan’s terms below to see the purchase price and built-in gain; how it is taxed depends on how long you hold the shares.
ESPP purchase estimate i
How the lookback changes the math
Without a lookback, your price is the purchase-date price minus the discount. With a lookback, it is the lower of the two prices, minus the discount. If the stock rose during the offering period, the lookback can make the built-in gain much larger than the stated discount.
Qualifying vs disqualifying dispositions
- Qualifying: sold more than 2 years after the offering date and more than 1 year after purchase. Part of the gain is ordinary income, generally limited to the discount; the rest is capital gain.
- Disqualifying: sold earlier. The spread at purchase is ordinary income, and later movement is capital gain or loss.
- Basis reporting for ESPP shares has the same 1099-B issues as RSUs. See RSU cost basis.
More: qualified vs disqualifying ESPP dispositions and ISO, NSO, and ESPP planning questions.
Equity pay changes what tools you need
“a person who earns incentive stock options or restricted stock units or performance shares or whatever has no business doing their taxes on TurboTax.”
— Malcolm Ethridge
“once you’ve grown up to a place where it’s a little bit more complex, the tools you use have to grow up too.”
— Malcolm Ethridge
Capital Area Planning Group works mainly with senior managers and executives in tech. More: advisors for executive compensation.
Take the quiz, or request quotes. Get a quote does not show matched firm names to visitors.
Frequently asked questions
What is a typical ESPP discount?
Section 423 plans can offer up to a 15% discount. Your plan document sets the actual terms.
What is an ESPP lookback?
A provision that applies the discount to the lower of the stock price at the start of the offering period or on the purchase date.
Is there a limit on ESPP purchases?
Section 423 plans limit purchases to $25,000 of stock per calendar year, measured at the offering-date price. Plans can set lower limits.
Should I sell ESPP shares right away?
That depends on your taxes, concentration in your employer's stock, and goals. This tool does not make that decision; talk to a professional.
Does this store my numbers?
No. The math runs in your browser.
We offer financial planning and investment management services to senior managers and executives in tech.
See Capital Area Planning Group’s profileRelated reading: 6 things to understand about an ESPP, ESPP tax reporting.
Some professionals on Sam’s List pay for visibility or leads. Inclusion and order do not rank professionals. This page is educational and is not tax, legal, or investment advice. Firm names are never shown on Get a quote matches.
Quotes and client examples are what Malcolm Ethridge described; they are not a guarantee of results.
Capital Area Planning Group is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. Nothing on this page is a recommendation to buy or sell any security, and calculator results depend entirely on the assumptions you enter.