vestingtax.com
Estimate vest tax

Equity taxes for employees near an IPO

IPO year can mix private option exercises with new RSU vests. separate the tax events clearly.

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

Spot an outdated rate or date?

We update when we can, but we miss things. Send a link to the official source if you have one.

Email us

Start here

An IPO year often mixes two different tax stories: private option exercises (which can create or ) and newly liquid (wages at ). Keeping the two events separate is the key to not double-counting or getting surprised.

Why this happens

Pre-IPO option exercises can trigger () or () before shares are liquid.

that settle at or after IPO are wage income when they .

Lockups can delay selling even once shares are public, separating tax from cash again.

Several events can land in one year, making the reporting feel tangled.

What to check

  • Which of your equity is options vs. , and their terms.
  • Whether pre-IPO exercises created income or .
  • settlement timing relative to the IPO.
  • Lockup periods affecting when you can sell.
  • Basis records for every lot you may sell.

Common mistake

Blending option-exercise income and income into one mental bucket. They are taxed at different times and in different ways, and conflating them leads to reporting errors.

Example scenario (hypothetical)

Illustration only, not your tax situation.

Example: an employee exercised options before the IPO (creating a spread that year) and also has that at listing. The two are separate tax events, and a lockup may delay selling either, so cash planning matters.

When to get help from a tax pro

  • You exercised options before the IPO.
  • You have both options and near listing.
  • A lockup affects your ability to sell.
  • You may owe from a pre-IPO exercise.

Related calculators

Related pages

For learning, not filing

Grants, employers, and states all differ. Use your own documents and a qualified tax professional before you make decisions from this guide.