2026 educational tax estimate
2026 ESPP Tax Calculator
Compare qualifying and disqualifying dispositions, ordinary income, adjusted basis, capital gain, and after-tax profit.
Calculation methodology reviewed by Carina Luo, CPA
Based on 2026 federal tax rules. Last reviewed July 2026.
Direct answer
A Section 423 ESPP sale can create both compensation income and capital gain or loss. The split depends on whether the holding periods are met. The calculator also corrects basis by adding the amount treated as compensation so the same discount is not taxed twice.
Your inputs
Quick estimate
2026
Estimated sale impact
Estimated after-tax profit
$17,722
Sale proceeds less purchase cost and estimated tax from this transaction.
Actual purchase price per share
$34.00
Ordinary income
$6,000
Capital gain / loss
$20,000
Estimated total tax
$8,278
Adjusted total basis
$40,000
NIIT
$760
Educational estimate only, not tax advice. Final results depend on full income, deductions, residency, prior returns, and transaction records.
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How the estimate works
The purchase price uses the entered discount on the lower of offering-date and purchase-date FMV. A qualifying disposition limits ordinary income to the smaller of actual gain or the offering-date discount; a disqualifying disposition generally recognizes the purchase-date spread as compensation. The remaining difference is capital gain or loss.
Important limitations
- This model assumes a qualifying Section 423 plan with a lookback feature.
- Loss sales, unusual plan terms, non-U.S. tax, and payroll reporting may require additional review.
Frequently asked questions
When is an ESPP sale qualifying?
Generally, the sale must occur more than two years after the offering date and more than one year after the purchase date.
Why can the 1099-B basis be incomplete?
The broker may show only the discounted purchase price and omit compensation income already reported through payroll.
What document should I keep?
Form 3922 and the plan or brokerage statements provide the dates and values needed to reconstruct basis.