What Should I Do After Selling My Company Stock?
By James McDougal, CFP® | July 21, 2026
This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rates and IRS rules are subject to change; consult a qualified tax professional before making decisions about your equity compensation.
TL;DR
RSU sales are generally taxed only as capital gains; same-day NSO or ESPP sales usually add an ordinary income component on top.
Long-term gains (held over a year) get preferential rates — plan to earmark roughly 24% for federal taxes plus your state's marginal rate.
Short-term gains, and the ordinary income portion of NSO/ESPP sales, are taxed at your regular income tax brackets.
Once taxes are set aside, allocate the remaining proceeds into “buckets” tied to specific goals and time horizons, not just a single risk-tolerance number.
Table of Contents
First of all, congratulations! Whether you're in big tech or have won the lottery at a startup, this is a massive step in your financial journey. Hopefully you've taken some time to breathe and celebrate, and are now beginning to think about next steps. You may be asking:
What are the tax implications of selling my company stock?
What should I do with the sale proceeds?
How does this impact my path towards financial independence?
These are all excellent questions, and we'll tackle them in this blog post. First, let's address the red-white-and-blue elephant in the room: taxes.
What Are the Tax Implications of Selling My Company Stock?
Your tax bill depends on where your equity came from. First, you'll need to understand what tax rates your sale will be subject to. If your equity comes from a Restricted Stock Unit (RSU) grant, your main consideration will be Capital Gains taxes. If you're selling employee stock options in a same-day sale, there will most likely be an Ordinary Income component in addition to Capital Gains. The same typically applies to equity sourced from an Employee Stock Purchase Plan (ESPP). If your equity is sourced from Incentive Stock Options (ISOs) that you're selling in a qualifying disposition, you'll need to watch out for capital gains in addition to accounting for the Minimum Tax Credit you're likely due if you paid Alternative Minimum Tax (AMT) when exercising your options. Payroll taxes (FICA and Medicare) are also levied on the option spread with Non-Qualified Stock Options (NSOs), though you can typically expect payroll to handle this piece for you. This stuff gets tricky!
Assuming you've got a grip on the more complex aspects of employee stock options and your equity is not held in a qualified retirement account, Capital Gains taxes are the next and often biggest consideration. At a glance, Capital Gains are calculated by subtracting your cost basis (the stock's value at the time of acquisition, generally speaking) from the net proceeds at the time of sale. If you held the stock for more than a year, you'll have a Long-Term Capital Gain on your hands, and likewise a Short-Term Capital Gain if the stock was held less than a year. Short- and Long-Term gains follow different tax tables, with Long-Term gains offering some of the most favorable tax rates available in the US tax code's current iteration.
Tax Treatment by Equity Type
| RSU | ESPP | ISO (qualifying disposition) | NSO (same-day sale) | |
|---|---|---|---|---|
| Ordinary Income? | No | Often (on the discount) | No (regular tax) | Yes (on the spread) |
| Capital Gains? | Yes | Yes | Yes | Yes (usually small, short-term) |
| Payroll Taxes? | Usually withheld at vest | Sometimes | No | Yes (FICA/Medicare) |
| Watch Out For | Cost basis is set at vesting, not grant | Qualifying vs. disqualifying disposition rules | AMT paid at exercise; check for a Minimum Tax Credit | Payroll typically withholds the ordinary income piece |
With that crash course in taxes out of the way, how do you actually implement this knowledge in your planning?
How Do I Account for Capital Gains Taxes When Selling My Company Stock?
The most reliable move is to set aside a portion of your proceeds for taxes before you spend or invest any of it. Though rarely an exact science, earmarking a portion of your proceeds for the taxes is the most straightforward way to keep out of trouble. If you've determined that your gain is Long-Term, it's generally advisable to hold back up to 24% of the gain for Federal taxes, plus your applicable marginal State tax rate. Short-Term gains are taxable at the same rates as wage income (plus the 3.8% Net Investment Income Tax for most high earners), so your earmark percentage should reflect your Federal and State income tax brackets. Let's explore this in a few examples:
Capital Gains Earmark Cheat Sheet
| Long-Term | Short-Term | |
|---|---|---|
| Holding Period | More than 1 year | 1 year or less |
| Federal Earmark | ~24% of the gain | Your marginal federal bracket |
| State Earmark | Your marginal state rate | Your marginal state rate |
Example: Jim's Long-Term RSU Sale
Jim "Big Money" Jackson has been a loyal Tesla employee for years, and has finally sold the RSUs he's been holding onto (despite HiFi Planning's guidance to sell them as soon as they vest!).
We'll assume he sells 1,000 shares, each with a cost basis of $200/share and a sale price of $400/share. We'll also assume that all of his shares are Long-Term.
The total sale proceeds are $400,000 and his total cost basis would be $200,000, resulting in a gain of $200,000.
Since this is a Long-Term gain, that means he should earmark $48k for Federal taxes ($200k x 24%). We'll assume he lives in CA and sits in the 10% marginal tax bracket, meaning he'll need to hold back $20k for State taxes, for a total tax earmark of $68k.
Example: Jenny's Same-Day NSO Exercise
Jim’s spouse, Jenny "Deep Pockets" Jackson, was a relatively early employee of Stripe and received a grant of stock options (ISO/NSO split) as part of her initial compensation package. With some diligent planning, she's decided to exercise and sell 1,000 of her NSOs in a Same-Day Sale. We'll assume all of these options have a strike price of $5 and a fair market value of $60/share.
Since this is an NSO exercise, she'll recognize the spread between the strike price and 409A value as Ordinary Income. In this case, she'll see $55k of NSO-sourced income reported as compensation on her paystub alongside her other wage and bonus income.
Since the FMV is the same at exercise and sale (i.e. she’s not allowing her shares to appreciate in value after exercising), she will not be recognizing any Capital Gains on the sale.
Her total proceeds, net of exercise cost, will be $55k. We'll assume she sits in the 35% Federal tax bracket and a 10% State bracket, for a combined marginal tax rate of 45%. In this case, she should earmark $25k for Ordinary Income tax on the option exercise (note, a portion of this $25k total will be withheld via payroll, in addition to FICA and Medicare taxes).
Worked Examples at a Glance
| Jim (Long-Term RSU) | Jenny (Same-Day NSO) | |
|---|---|---|
| Shares/options | 1,000 | 1,000 |
| Total proceeds | $400,000 | $55,000 (net of exercise cost) |
| Ordinary income | $0 | $55,000 |
| Capital gain | $200,000 (long-term) | n/a |
| Total tax earmark | $68,000 | $25,000 |
Simple stuff, right? In all seriousness, tax planning is complex, and it's advisable in situations like these to meet with a qualified financial planner before pulling the trigger. But alas, now you've sold your shares; what comes next?
What Should I Do With the Proceeds From Selling My Company Stock?
Assuming you've earmarked an appropriate amount for taxes, you should next think about your broader financial planning goals. Are you trying to hit your FIRE number? Trying to buy a house or send your kids to college? Do you expect to take care of aging family members? The intended endpoint for your sale proceeds should dictate how you manage them in the interim. So how does that work?
HiFi Planning is partial to the ‘bucketing’ approach. This works by tying savings targets to larger financial planning goals and allocating the funds in each bucket based on their individual time horizons. For example, let's assume someone has two ‘buckets’ they're intending to fund: one for financial independence and one for charitable giving. For the financial independence bucket, we'll assume they've worked with a financial planner to determine their FIRE number and expect to reach their goal within the next 25 years. For the charitable giving bucket, they haven't decided which organizations to help, but plan on executing their charitable giving strategy 5 years from now.
While both of these buckets will be invested in some mixture of equities and fixed income assets, the difference in time horizon (5 years vs 25 years) will drastically impact their individual allocations. For example, a 60% stock 40% bond allocation may be appropriate for their charitable giving bucket, while an 80/20 or 90/10 allocation may be more suitable for their financial independence bucket. The big factor here is time, which is the key to stomaching risk.
Frequently Asked Questions
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Yes. The value of the shares are typically taxed as ordinary income at vest, and then any gain or loss between the vesting price and your eventual sale price is taxed as a capital gain (long-term or short-term depending on how long you held the shares after vesting).
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Not on the same dollars, but there are two separate pieces: the spread between your strike price and the fair market value at exercise is ordinary income, and any further gain between exercise and sale is a capital gain.
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Short-term applies to assets held one year or less and is taxed at your ordinary income rates (plus Net Investment Income Tax, if applicable). Long-term applies to assets held more than a year and gets access to lower, preferential Federal tax rates.
Take Control of Your Company Stock Proceeds With HiFi Planning
Whether this is your first time managing proceeds from a liquidity event or you've been around the block a few times, it's important to understand whether your nest egg is working hard for you. Schedule your Discovery Call today to take the first step in unlocking your company stock proceeds!
