Offer Comparison Calculator

Every offer letter values equity the same way: number of shares, multiplied by what a share is worth today. It is a defensible number and it is almost never what you will receive. It ignores the strike price you have to pay, the tax that lands when the shares become real, and — at a private company — the possibility that the answer is zero.

The comparison that follows from those letters is correspondingly wrong. Base plus equity-value, side by side, treats a public company’s restricted stock like a bond and a startup’s options like the same bond with a bigger coupon. They are not the same instrument, they are not taxed the same way, and one of them can evaporate.

This models both offers year by year on the same basis: salary and bonus taxed as wages, equity taxed when it actually becomes income, and everything stacked together so the progressive rates fall where they really fall. Then it asks the only question that does not require you to guess — how likely does the risky offer have to be before it wins?

How this is calculated

Both offers go through the same machinery. What differs is when the equity becomes income and whether Social Security and Medicare touch it.

1. Cash, every year base × (1 + bonus) → ordinary income Taxed as wages, with FICA. The bonus is treated as certain, which flatters the offer that leans on it.
2. RSUs each year: shares vesting × price that year → ordinary income Under §83(a) a vest is a wage payment at whatever the shares are worth on the day. Spread across the vesting period, which keeps each year’s bracket lower.
3. Options at the horizon: vested shares × (exit price − strike) → ordinary income Modelled as exercised and sold on the same day, which is what most people do. The whole spread lands in one tax year and drags the top of it into the highest bracket.
4. Social Security and Medicare on salary, bonus and RSUs — not on an ISO disposition §3121(a)(22) excludes remuneration on a disposition of statutory option stock from FICA wages. Two otherwise identical grants differ by that amount and nothing else.
5. The probability haircut equity after tax × your estimate that it is worth anything A blunt instrument applied honestly. Set it to 100% for a public company. For a private one, nobody knows — which is why the break-even below is the figure to argue about.
6. The break-even (other offer’s total − this offer’s cash) ÷ this offer’s equity after tax Exact arithmetic, not a search: both totals are linear in the probability. Above 100% the risky offer cannot win even if everything goes right.

A worked example

Sam has two offers. The startup pays $180,000 and grants 100,000 incentive stock options at a $1.00 strike, when the 409A valuation is also $1.00. The recruiter describes this as "$100,000 of equity". The public company pays $220,000 with a 15% bonus and 2,000 RSUs at $150 a share — "$300,000 of stock".

The startup grant’s value today is zero. The strike equals the valuation, so exercising this afternoon would buy shares for exactly what they are worth. The $100,000 in the letter is the gross value of the shares, not of the option over them, and the difference is the entire grant.

Assume the startup triples every couple of years — 60% annually — and the shares reach $6.55 after four. The full grant vests, the spread is $555,360, and it all lands in one tax year, where the top of it is taxed at 37%. After $190,149 of tax it nets $365,211. Because these are incentive options sold in a disqualifying disposition, no Social Security or Medicare applies, which saves $13,150 against the same grant as NSOs.

The public offer nets $740,606 of cash over four years against the startup’s $537,184, and its RSUs — vesting into a stock compounding at 8% — add $230,988 after tax. Total $971,594 against the startup’s $628,487 at a 25% probability. The startup would need its equity to be 118.9% certain to draw level, which is impossible. On these assumptions the decision is not close, and no belief about the company can make it close.

Change the growth assumption to 100% a year and the break-even falls to 45.2% — still a judgement, but a real one. That comparison is itself a golden case, asserted on every build.

What this does not model

Every calculator has a boundary. Here is where this one stops — read it before relying on the number.

• Salary is held flat for the whole horizon. Real careers have raises, and the offer with more room to grow is undervalued here. Where two offers differ materially in expected progression, model the difference by raising the base rather than trusting the totals.
• The probability applies to the equity being worth anything at all, as a single blunt number. It cannot express the shape of the distribution — a company with a 10% chance of being worth a hundred times more is not the same bet as one with a 50% chance of doubling, and both would be entered the same way here.
• Options are modelled as exercised and sold at the horizon, which taxes the whole spread as ordinary income. Early exercise, an 83(b) election, or a qualifying ISO disposition can convert much of that to long-term capital gain, which materially improves the option offer. Those paths have their own calculators and their own risks.
• No alternative minimum tax is modelled. Exercising incentive stock options and holding rather than selling triggers AMT instead of ordinary income, which is a different and often larger bill in the exercise year.
• Dilution is ignored. A startup that raises two more rounds will issue shares, and your fixed grant becomes a smaller fraction of the company. The growth rate here is a share-price assumption, so dilution has to be reflected by lowering it.
• RSUs are assumed sold at vest. Holding them is a separate investment decision that adds capital gain or loss on top, and concentrating your savings in your employer’s stock is a risk this page does not price.
• Every year is priced against the 2026 brackets, and state tax is one flat rate applied to all wages. Brackets are indexed annually and state systems are progressive, so a four-year projection is a shape rather than a forecast.
• Benefits, equity refreshes, health cover, retirement matching and the value of the work itself are all outside scope. A refresh grant in particular can be worth more than the initial one at a company that gives them, and neither offer letter usually mentions it.

Questions

Sources

Every rate and threshold used above traces to one of these. We cite the statute, the regulation, or the IRS directly — never another commentary site.

• IRC §83(a) — property transferred in connection with services
• Treas. Reg. §1.83-7 — taxation of non-qualified stock options
• IRC §421(b) and §422 — incentive stock options and disqualifying dispositions
• IRC §3121 — FICA wage base, Medicare, and the §3121(a)(22) exclusion
• Rev. Proc. 2025-32 — 2026 brackets and standard deduction
• Rev. Proc. 2025-32 (2026 inflation adjustments) — §2.15
• Rev. Proc. 2025-32 (2026 inflation adjustments) — §2.01
• IRS Topic no. 751 — Social Security and Medicare withholding rates
• SSA 2026 COLA fact sheet — Social Security taxable wage base

Related calculators

• RSU Withholding Shortfall CalculatorYour employer withholds a flat 22% on vesting RSUs regardless of what you actually earn.
• ISO AMT CalculatorExercising an incentive stock option produces no regular taxable income and can still produce a very large tax bill.
• NSO Exercise Cost CalculatorExercising a non-qualified stock option is a taxable event the moment you do it.
• Exercise Financing Break-Even CalculatorNon-recourse lenders will pay your strike price and your tax bill in exchange for interest and a share of the upside.