Investment
intermediate · $50K - $100K
ESPPs let you buy your employer's stock at up to 15% discount through payroll deductions.
Buying at $85 what's worth $100 is a 17.6% discount on the purchase price.
Holding 1+ year qualifies for better long-term capital gains treatment; it also means holding a single company's stock.
Annual Limit
$25,000 in stock purchases per year
Tax Benefit
15% discount + potential long-term capital gains treatment
Requirements
- Employer offers ESPP
- Meet employment requirements (typically 6-12 months)
- Can contribute up to $25,000/year in stock purchases
How to Implement
- 1Enroll during enrollment period
- 2Elect payroll deduction amount (1-15% typically)
- 3Company purchases stock at end of offering period
- 4Hold 1+ year for qualifying disposition (better tax treatment)
Frequently Asked Questions
Related investment strategies
Sources
- Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
- Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
- Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.