ESPP Calculator
Calculate your Employee Stock Purchase Plan return. Lookback periods, immediate sale vs qualified disposition, after-tax profit.
FAQ
What is a lookback?
A feature where the purchase price uses the lower of (price at start of offering period) or (price at purchase) — then applies the discount on top. Hugely valuable when the stock rises during the period.
Immediate sell or hold?
Immediate sell locks in the discount as guaranteed return. Holding for "qualified disposition" (2 yrs from grant + 1 yr from purchase) shifts more gain to LTCG rates but concentrates risk in employer stock. Most advisors recommend immediate sell.
What's the $25k limit?
IRS Section 423 caps qualified ESPP purchases at $25,000 of FMV per employee per year. The 15% discount on $25k is up to $3,750 guaranteed annual return on contributions.
Why is concentration risk a concern?
Your salary, health insurance, and 401k are all already tied to your employer. Holding additional stock concentrates risk further. If the company struggles, you face simultaneous job + investment loss.
Disclaimer. ESPP rules vary by company. Holding for qualified disposition concentrates risk. Consult a CPA for tax optimization and a fee-only financial advisor for asset allocation.