See how a stock price jump during your offering period turns a 15% discount into a much bigger gain.
Enter stock prices and a contribution greater than zero.
Potential pre-tax gain if you sell on the purchase date
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| Price you pay per share | — |
|---|---|
| Effective discount off the purchase-date price | — |
| Shares purchased | — |
| Value of shares on the purchase date | — |
| Amount contributed | — |
| Pre-tax gain | — |
| Estimated federal income tax if sold immediately | — |
| Estimated after-tax gain | — |
Why the lookback matters
This calculator is an illustration for general educational purposes and is not tax, legal, or investment advice. It assumes you sell all shares on the purchase date at the price you enter, that the discount is applied to the price shown, and that the $25,000-per-year purchase limit (measured at the start-of-period price) is your only purchase this calendar year. Taxes shown are federal ordinary income tax only; state tax is not included. Plan terms vary, so check your plan documents.
Many ESPPs include a lookback. Instead of applying your discount to the price on the day you buy, the plan applies it to the lower of the stock price on the first day of the offering period and the price on the purchase date.
When the stock rises during the period, the lookback locks in the lower starting price. With a $100 starting price, a $150 price on the purchase date and a 15% discount, you pay $85 per share for stock worth $150, a gain of about 76% before taxes. Without a lookback, the same 15% discount only gets you down to $127.50, a gain of about 18%.
If the stock falls during the period, the lookback has nothing extra to give you. The discount then applies to the lower purchase-date price, which is the same result as a plan without one.
Plan terms and tax details vary. Book a free 15-minute call and we'll look at yours.
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