Calculate your stock grant vesting schedule. See vested vs. unvested shares, current value, and monthly vesting breakdown.
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Fair Market Value when equity was granted
Months before first vesting (usually 12)
Today's FMV or estimated value
A Chicago-area couple, combined income $98,000, are stress-testing a financial decision — whether to pay off a $14,000 car loan early or redirect that cash into a 401(k) match they're currently leaving on the table.
Takeaway: Run this with your specific loan rate and employer match. The crossover point shifts when the loan rate exceeds ~8% or the match is partial. Use the calculator above with your own inputs.
Most investment calculators default to 6-8% annual returns based on historical S&P 500 averages. Actual returns vary significantly by decade — the 2000s delivered near-zero real returns for 10 years. Run scenarios at 4% and 10% to bound your estimate.
A calculator showing you'll have $1.2M in 30 years is in nominal dollars. At 3% inflation, that's worth ~$495K in today's purchasing power. Look for a "real return" or "inflation-adjusted" option, or subtract 2-3% from the assumed growth rate manually.
If your investment account is taxable (not IRA/401k), dividends and capital gains distributions reduce compounding each year. After-tax returns in a taxable account typically run 0.5-1.5% below pre-tax figures depending on turnover and your bracket.
A 1% annual fund fee on a 30-year $500/month investment compounding at 7% costs roughly $170,000 in foregone growth vs. a 0.05% index fund. Always input your actual expense ratio — not zero.
Some calculators only model federal tax rates. Nine states have no income tax; others tax retirement distributions, Social Security, or capital gains differently than federal rules. The state-level difference can swing after-tax results by 3-9% of gross.
State Tax CalculatorBased on your inputs
| Total Grant Shares | 1,000 |
|---|---|
| Original Grant Value | $10,000 |
| Current Vested Shares | 250 |
| Current Vested Value | $6,250 |
| Unrealized Gain (Vested) | $3,750 |
| Unvested Shares | 750 |
| Unvested Value | $18,750 |
| Total Grant Value (today) | $25,000 |
| Monthly Vesting Rate | 20.83 shares/month |
Vesting Schedule
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Tech companies offer equity (stock ownership) as part of compensation instead of or in addition to higher salaries. Equity comes in two forms: (1) RSUs (Restricted Stock Units)—you get actual shares once vested, (2) Stock Options—you get the right to buy shares at a fixed"strike price" in the future. Both incentivize long-term retention and align employee and shareholder interests. For early-stage startups, equity might be 30-50% of comp because the company has limited cash. For FAANG, equity is 15-30% of comp on top of high salary.
An RSU is a promise to give you actual shares of company stock once you meet vesting requirements (usually tenure). Example: You're granted 1,000 RSUs at a $10"grant price" (the value assigned for accounting). Over 4 years with a 1-year cliff, you vest: Year 1: 250 shares, Year 2: 250 shares, Year 3: 250 shares, Year 4: 250 shares. At vesting, you own the shares at their fair market value on that date (not the $10 grant price). If stock is $50 at year 1 cliff vesting, you own $50 × 250 = $12,500 of value. RSUs have historically reliable value at vesting (the stock price), so they're less risky than options.
A stock option is the right to buy shares at a fixed strike price. Example: 10,000 options at a $5 strike price. If stock rises to $50/share, you can exercise (buy 10,000 shares at $5 each = $50,000 out of pocket) and immediately sell for $50 each = $500,000 (minus $50,000 cost = $450,000 profit). Options have zero value if stock price stays below strike. Two types: (1) ISOs (Incentive Stock Options)—tax-advantaged if held 2+ years after exercise, (2) NSOs (Non-Qualified Options)—taxed as ordinary income at exercise. ISOs are valuable for high-growth companies; NSOs are common for mature companies or late-stage equity.
The standard vest is 4 years with a 1-year cliff. Cliff: You may want to stay 1 year to get any shares. If you leave at month 11, you get nothing. If you leave at month 13, you own 25% (the first year's grant). This protects companies from employees joining, learning, and leaving immediately. After the cliff, shares vest monthly (1/48th per month for the remaining 3 years). Monthly vesting prevents large value cliffs at year 2/3/4 marks. Some companies use: 3-year vest, 6-month cliff (common at mature companies), or 2-year vest with quarterly vesting (rare). Startups sometimes use longer vests (5 years) to ensure long-term commitment.
For a 1,000-share grant over 4 years with 1-year cliff: Year 1 (cliff): 1,000 × 25% = 250 shares vest. Remaining 750 shares vest monthly over years 2-4: 750 / 36 months = 20.83 shares/month. Month 13: 250 + 20.83 = 270.83 shares vested. Month 36: 250 + (20.83 × 24) = 750 shares vested. Month 48: all 1,000 shares vested. The cliff is critical: if stock is $5 at hiring and $100 at year 1 cliff, those 250 shares are suddenly worth $25,000 (a huge income event). This is why timing matters for exercising options and planning taxes.
Most tech companies refresh equity annually. A senior engineer with a $600k/year 4-year grant might get a new $150k grant each year. This keeps total equity vesting spread over time and prevents cliff-like value drops after year 4. A refreshed grant has a new vesting schedule (e.g., 4 years from grant date). Over a long career, you might have 5+ overlapping grants vesting at different times.
RSU Taxation: At vesting, you owe income tax (22-37% depending on bracket) on the fair market value of shares. Example: 250 RSUs vest at $100/share = $25,000 taxable income. If you're in the 37% bracket, you owe $9,250 in taxes. Many companies offer"net settlement" (withhold shares to cover taxes). If you sell the shares later at $120/share, you also owe 15-20% long-term capital gains tax on the $5,000 gain. Option Taxation: ISOs are taxed favorably if held 2+ years after exercise (long-term capital gains rates). NSOs are taxed at exercise as ordinary income. Example: Exercise 10,000 NSOs at $5 strike when stock is $50. You owe tax on $450,000 of income. If you're in the 37% bracket, you owe $166,500 in taxes upfront. This is why option exercises are usually funded by selling some shares immediately.
Startup (Series A-C): Equity is highly speculative. Stock might be worth $0 if the company fails, or $1,000/share at IPO. Options are often the best value here (low strike, high potential). $100k in options might return $10M at exit. Series D+/Late Stage: Stock is more valuable and less speculative. Options/RSUs at $50-100/share are common. ROI is lower but more predictable. Public Company (FAANG): RSUs vest into real, tradable stock. Value is liquid. A $1M equity grant from Apple or Google is worth exactly $1M regardless of future stock performance. The tradeoff: less upside, but less risk.
Salary is negotiable, and so is equity. Tech industry benchmarks: (1) Startup (Series B): Mid-level engineer, $130k salary + $200k equity/4yr = $180k total comp. (2) Series C: Mid-level, $150k + $350k/4yr = $237k. (3) Series D+: $170k + $500k/4yr = $295k. (4) FAANG (Google, Apple, Meta): $180k + $1M/4yr = $430k+. Ask for: (1) Higher equity if you're joining early-stage (pre-Series A). (2) Shorter vesting cliff if company is proven (6-month cliff instead of 1-year). (3) Accelerated vesting if company is acquired during your employment. (4) Double-trigger acceleration (equity vests if fired after acquisition). These are common negotiation points.
Best case: You join a startup at $0.10/share (or pre-IPO at $5). Stock rises to $100+ at exit (IPO or acquisition). Your $100k equity grant is now $100M. This happens rarely but has created many startup millionaires. Base case: Stock rises 2-3x over 4 years. Your $300k equity grant is worth $600-900k by year 4. Common for Series B-D companies. Bad case: Stock declines or company fails. Your equity is worth $0 or a fraction of grant value. This is why diversifying income (high salary) and diversifying equity (multiple companies over a career) is wise.
A vesting schedule is a timeline that determines when you own equity awards. Typical: 4 years with 1-year cliff. You get 25% at year 1, then 1/48th monthly for 3 more years. Leave before cliff = forfeit all.
The cliff is the first vesting date (usually 1 year). If you leave before the cliff, you get nothing. After the cliff, shares typically vest monthly. Cliffs protect companies from quick departures.
RSUs (Restricted Stock Units) vest to you automatically and have value at vesting date = shares × stock price. Options give you the right to buy at a fixed strike price. RSUs have historically reliable value; options only profit if stock rises.
Vesting is a taxable event. You owe income tax on fair market value at vesting date (ordinary income rate ~22-37%). If you sell later, you owe capital gains tax on appreciation. Some plans allow tax-withholding by shares.
Tech industry norms: startup $150k-500k/4yr, Series B $300k-1M/4yr, Series C+ $500k-2M/4yr. FAANG mid-level: $800k-2M over 4 years. Stock refreshes every 1-2 years to reset vesting timeline.
The most common schedule is 4-year vesting with a 1-year cliff. After the cliff, 25% of shares vest immediately. The remaining 75% vest monthly or quarterly over the next 3 years. Some companies use 3-year or 5-year schedules instead.
Unvested shares are forfeited when you leave. Only vested shares belong to you. With stock options, you typically have 90 days to exercise vested options after departure. Some companies offer extended exercise windows of up to 10 years.
The cliff is the initial waiting period, usually 12 months, before any shares vest. If you leave before the cliff, you receive nothing. The vesting period is the total time over which all shares become yours, typically 3-4 years including the cliff.
Early exercise can start the long-term capital gains holding period sooner and may reduce AMT impact for ISOs. However, you risk paying for shares that could lose value. Exercise early only if you have strong confidence in the company's future valuation.
RSUs are taxed as ordinary income at the stock's fair market value on the vesting date. Your employer withholds income tax, Social Security, and Medicare from the shares. Many companies automatically sell a portion of vesting shares to cover the tax obligation.
Cliff Vesting = Total Shares × (Cliff Months / Total Months)
Monthly Vest Rate = (Total Shares - Cliff Vested) / (Remaining Months)
Vested Value = Vested Shares × Current Stock Price
Total Grant Value = Total Shares × Current Stock Price
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.