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Equity taxes when you leave a company

Job changes stop new vesting, but past vests still need correct reporting — and options may expire soon.

Rates and rules change. Content is reviewed for tax year 2026. Check the last-reviewed date and methodology on each page, then confirm against IRS or state guidance before you file.

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In plain terms

Leaving usually stops future , but it does not erase tax on what already vested, and it can start a short clock to exercise vested options. Your final should reflect any vests through your last day, and unexercised options may expire sooner than you expect.

How the tax works

Unvested are typically forfeited when you leave, unless your plan says otherwise.

Vests that occurred while employed are already wage income and still need correct reporting.

Vested options often have a limited post-termination exercise window before they expire.

Exercising after leaving still triggers tax on the spread.

What to check on your end

  • What happens to your unvested under the plan.
  • Whether any occurs on or before your last day.
  • Your post-termination option exercise deadline.
  • What your final should include.
  • State sourcing if you have since moved.

Common mistake

Letting vested options expire after leaving, or assuming no tax applies once you are gone. Past vests still need reporting, and exercising after leaving is still taxable.

Example scenario (hypothetical)

Illustration only, not your tax situation.

Example: someone leaves with vested options and a short exercise window noted in the plan. They must decide whether to exercise (and fund the tax) within that window or forfeit the options.

When a CPA is worth it

  • You have vested options with a closing window.
  • You are unsure how unvested are treated.
  • You moved states after leaving.
  • Your final looks incomplete.

Sources and notes

Primary tax claims on this page are supported by the official and secondary sources below. Broker and software links describe reporting mechanics — confirm rules against IRS or state guidance.

Employee equity tax planning context — not role-specific tax law.

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For learning, not filing

VestingTax.com is not a CPA firm or tax preparer. Grants, employers, and states all differ. Use the cited IRS and state sources above, your own documents, and a qualified tax professional before you make decisions from this guide.

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