Finance

Golden Parachute Excise Tax Calculator (§280G)

Find the 20% excise tax triggered when change-in-control payments exceed the safe harbor threshold.


Golden Parachute Excise Tax Calculator (§280G)

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A punitive 20% excise tax on the executive, plus a lost tax deduction for the company, triggered once total change-in-control payments reach three times the executive’s base amount.

How it works

Three times the base amount sets the safe harbor threshold. If total payments meet or exceed that threshold, the excise tax applies to the excess over just one times the base amount — not only the amount above the threshold itself.

What this does not include

This computes the excise tax on the executive — it doesn’t separately compute the company’s lost tax deduction on the same excess parachute payment, a related but distinct consequence of crossing the same threshold.

How to use this calculator

  1. Enter the base amount (average prior 5-year compensation) and total change-in-control payments.

Frequently asked questions

Why is the threshold based on 3x but the tax applies above 1x?

This is a deliberate “cliff” design — crossing the 3x trigger point taxes everything above 1x base amount, not just the portion above 3x, making the consequence of crossing the threshold much larger than the threshold itself might suggest.

What is the “base amount”?

Generally the executive’s average annual W-2 compensation over the five taxable years before the change in control — a backward-looking average, not current or future compensation.

Can golden parachute payments be structured to avoid this tax?

Yes — companies often negotiate payment structures deliberately kept below the 3x safe harbor threshold, or obtain shareholder approval exemptions available to certain private companies, to avoid triggering 280G entirely.

Important: This is general information, not financial advice. Figures are estimates, and your lender or provider decides the real numbers. Check with a qualified adviser before acting on them.

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Written by

M. Whitfield

Personal finance writer

M. Whitfield writes the personal finance calculators, covering loans, mortgages, savings, tax and investment maths. The focus is on showing exactly which number goes into a formula and which assumptions a result depends on, so readers can tell when a figure applies to their situation and when it does not. Every finance page states what it does not account for as plainly as what it does.

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A. Whitfield-Reyes

Calculator reviewer — finance

A. Whitfield-Reyes reviews the finance calculators, checking compounding conventions, rate-period alignment, and whether each page is explicit about the costs and tax treatment it leaves out. Financial results are easy to state with false precision, so review focuses on whether the page makes its assumptions visible to a reader who is not looking for them.

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