An employee stock purchase plan lets you buy company shares through payroll deductions at a discount, often with a lookback that applies the discount to the lower of two prices. This calculator shows how many shares your contribution buys, the gain from the discount and lookback, and the tax under each way of selling.

This calculator runs in your browser and needs JavaScript. With scripts off you can still read the explanation below, which walks through the same maths by hand.

The offering period

Share price at the start of the offering period The grant-date or enrollment-date price.

Share price on the purchase date The closing price the plan uses on purchase day.

Plan discount Most Section 423 plans use 15%; some use 10% or 5%.

Plan has a lookback (discount applies to the lower of the two prices)

Your contributions this period After-tax payroll deductions accumulated over the period.

Offering period length (months) Used for the annualised return.

The sale

Sale price per share Leave blank to assume you sell at the purchase-date price.

When you sell

Your situation

Other taxable wages this year

Filing status

State of residence State income tax on the vest; the list loads with the page.

Results update as you type. Your inputs are kept in the page address so you can bookmark or share them; nothing is sent to a server.

Running these numbers for a real decision? The calculator shows the mechanics. It cannot see your full return, your other income, or your state’s quirks. Before you act on a large vest, exercise or conversion, have a CPA or a fee-only advisor who works with equity compensation check the figures. Find a fee-only adviser near you or get matched.

How a Section 423 ESPP works

You elect a percentage of after-tax pay, typically up to 10% or 15%, which accumulates during an offering period of three to twenty-four months. On the purchase date the plan buys whole shares at the discounted price. Under Section 423 of the tax code the discount can be up to 15%, and you can buy at most $25,000 of stock per calendar year measured at the offering-date price. The shares land in a brokerage account at the plan administrator and are yours to sell at once.

The lookback is what makes a good plan exceptional. With a 15% discount and a lookback, if the price rises from $100 to $120 during the period you pay $85 for a $120 share: a 41% gain on the day of purchase. If the price falls from $100 to $80 you pay $68 for an $80 share, still a 17.6% gain on the money you put in. The discount alone guarantees a return of discount ÷ (1 − discount) if you sell at the purchase price; the lookback adds to it in rising markets.

Qualifying versus disqualifying dispositions

The tax treatment depends entirely on when you sell.

Disqualifying disposition (sold within two years of the offering date or one year of the purchase date): the spread between the purchase-date market price and what you paid is ordinary income, reported on your W-2 with no Social Security or Medicare tax. Any further gain or loss from the purchase price is a capital gain, short-term if held under a year.
Qualifying disposition (held more than two years from offering and one year from purchase): the ordinary income portion is the lesser of the discount measured at the offering-date price or your actual gain, and everything else is long-term capital gain. If the stock fell, the ordinary income can be far less than the discount you received.

Qualifying treatment lowers the tax rate on part of the gain but requires holding a concentrated position in your employer for up to two years. Many planners recommend selling immediately and treating the discount as a guaranteed bonus. The RSU tax guide covers the same concentration argument for vested stock.

Worked example

Input	Value
Offering price / purchase price	$100 / $120, 15% discount with lookback
Price paid	$85 (15% off the lower price)
Contribution	$10,000 buys 117 shares for $9,945
Market value at purchase	$14,040, a $4,095 pre-tax gain
Sold immediately	$4,095 of ordinary income, taxed at your marginal rate

At a 32% federal and 9.3% California marginal rate the after-tax profit is roughly $2,400, about 24% on the contribution in six months.

Assumptions and limits

Models a Section 423 qualified plan. Non-qualified ESPPs tax the entire discount as wages at purchase, including payroll taxes.
Buys whole shares; leftover contribution is assumed refunded or carried forward.
Uses the standard deduction and your other wages to place the ESPP income in the right federal and state brackets. Capital gains above the threshold attract the 3.8% net investment income tax.
Does not model the $25,000 annual limit or multiple purchase periods within one offering.

Frequently asked questions

Should I max out my ESPP?

If the plan has a 15% discount and you can sell immediately, the discount is a near-guaranteed return on money tied up for an average of three months. The usual constraint is cash flow: contributions come out of after-tax pay before the shares arrive.

Does the ESPP income show up on my W-2?

For a disqualifying disposition, yes, in the year you sell. Your employer also files Form 3922 in the year of purchase. For a qualifying disposition the ordinary income portion may not be on a W-2 and you report it yourself.

Which companies have a lookback?

Apple and Salesforce run 15% plans with a lookback; Microsoft offers 10% off the purchase-date price with no lookback; Intel kept its 15% discount but removed the lookback from the February 2025 purchase period. See the Apple, Microsoft, Salesforce and Intel guides. Amazon, Google and Meta do not offer an ESPP.