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Definition

ESPP (Employee Stock Purchase Plan)

A workplace plan that lets you buy company stock at a discount (often 15%) through after-tax payroll deductions.

Written by Jere Salmisto·Reviewed by CalcFi Editorial·Last verified: 2026-05-13
TL;DR

ESPP (Employee Stock Purchase Plan) is A workplace plan that lets you buy company stock at a discount (often 15%) through after-tax payroll deductions. Used in tax.

What Is ESPP (Employee Stock Purchase Plan)?

A Section 423 ESPP allows employees to purchase company shares at up to a 15% discount, typically with a "lookback" feature that uses the lower of the offering-period start or end price. Holding the shares long enough produces a "qualifying disposition" with more favorable tax treatment.

Related Terms

RSU (Restricted Stock Unit)
Company shares granted to an employee that vest over time and are taxed as ordinary income when they vest.
Employee Stock Option
The right to purchase company stock at a predetermined price within a specified time.

Related Calculators

Stock Options & RSU Calculator→
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