ESPP Calculator
Calculate the discount, guaranteed return, and tax treatment of an employee stock purchase plan with a lookback.
Your details
IRS caps ESPP purchases at $25,000 of grant-date value per year
Prices
Tax
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Return per offering period
41.18%
82.4% annualized on $7,500 contributed
Includes your inputs, the full breakdown, and every row of the table.
Purchase price per share
$85.00
Lookback applied to $100.00
Shares purchased
88.24
Immediate profit
$3,088
Before tax, if sold at purchase
Annual profit
$6,176
2 periods per year
- Annual contribution
- $15,000
- Contribution per period
- $7,500
- Market value at purchase
- $10,588
- Gross gain
- $3,088
- Tax if sold immediately (disqualifying)
- $988
- Tax if held to qualifying disposition
- $688
- Tax saved by holding
- $300
What this means
- You could contribute up to $10,000 more per year before hitting the IRS limit.
- The lookback is worth real money here: it prices your purchase off $100.00 instead of $120.00.
- A qualifying disposition requires holding at least two years from the grant date and one year from purchase. Holding also means carrying single-stock risk for that period.
How the espp calculation works
An employee stock purchase plan lets you buy company stock at a discount, usually 15%, through payroll deductions. A 15% discount alone is a 17.6% return on the money you put in. Plans with a lookback provision — pricing off the lower of the offering start price and the purchase price — can produce far more when the stock rises during the period.
The tax treatment splits on how long you hold. Sell right away and it is a disqualifying disposition: the discount plus any gain is ordinary income. Hold two years from grant and one year from purchase and it qualifies, converting part of the profit into long-term capital gain. The tax savings have to be weighed against holding a concentrated position in the company that also pays your salary.
Frequently asked questions
Is an ESPP worth it?
If you can afford the payroll deduction and the plan has a meaningful discount, it is one of the highest-certainty returns available to an employee. Selling immediately locks in the discount and removes the concentration risk.
What is the $25,000 limit?
Section 423 limits you to $25,000 of stock per calendar year measured at the grant-date price, not the discounted price. With a 15% discount that works out to roughly $21,250 of actual purchases.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.