How Anthropic engineers will lose 56% of their equity

By now, everyone knows Anthropic. With its latest $380B valuation, the company's staggering raise has created massive, life-changing paper wealth for its early employees.

But paper wealth and actual cash are two very different things.

Let's look at a hypothetical Anthropic infrastructure engineer named Arjun to see how a multi-million dollar payday can quickly get slashed in half.

The setup

Arjun joined Anthropic back in December 2023. He took a $300,000 base salary and a grant of 120,000 stock options. The options follow an industry-standard vesting cycle: one-year cliff, then monthly vest after. In addition, Anthropic allows employees to exercise their options early.

By IRS rules, the first $100,000 of your grant are treated as Incentive Stock Options (ISOs), and the rest automatically become Non-Qualified Stock Options (NSOs). We'll dive into the exact math later, but the golden rule is simple: ISOs offer much better tax breaks, so you want as many of them as possible.

At the time, Anthropic was already valued at $15B and — using publicly available information — the ballpark estimate for the price of each option was $12. In turn, the 120,000 stock options would mean a total value of $1.44M.

Although this looks like life-changing wealth, let's not get too excited. Because these are stock options and not actual stock, Arjun has the option to purchase the equity. The price at which he can purchase is $12 per option. He needs to meet two conditions to actually own his equity: first, he needs to pay $1.44M upfront to purchase the options, and second, he needs to meet the vesting timeline.

Unfortunately, Arjun doesn't have $1.44M liquid to actually purchase his equity.

Even if he did, there was still no guarantee of Anthropic's success. Think about it — this was a time well before Claude, and months before Google released Gemini. Does it make sense for him to leverage his life savings into a two-year-old startup? Arjun decided to hold his option and worry about it later.

The tender offer

Fast forward to April 2026. Anthropic is soaring, Claude is taking over the internet, Dario is a lord and savior, and every startup founder is in fear their company will evaporate with Anthropic's next release.

As a startup grows, the natural next step is to offer liquidity opportunities to employees. Known as tender offers, it's when a private company allows employees to sell their vested shares. In a typical tender offer, eligible employees usually can sell up to 20% of vested options.

Again, by analyzing Anthropic's outstanding shares and valuation, the price at which shares would be sold is now hovering at $375.

Given Arjun joined back in December 2023, 72,500 options have vested — 8,333 ISOs and 64,167 NSOs. He calculates he can liquidate 14,500 options for a total of $5.44M.

The 56% nuke

There's only two things guaranteed in life: death and taxes. Unfortunately for Arjun, he's going to have a rude awakening when Uncle Sam comes calling.

It wouldn't be wrong to assume his $5.44M payday would be taxed as long-term capital gains — he's selling shares (capital gains) and it's been over a year since he was granted them (long-term). But it's actually much worse.

First, there are three numbers we have to be aware of:

• Strike price. The price at which options are granted.
• Fair market value (FMV). The current value of each option.
• Preferred price. The price at which investors are willing to pay for each option.

With Arjun, the strike price of his Anthropic options is $12 and the preferred price is about $375. It's unclear what the fair market value is since that's internal to the company. For the sake of discussion, let's say the FMV is $200 (in practice it's probably significantly higher).

Remember how his offer included 8,333 ISOs and 64,167 NSOs? In practice, they have fundamentally different tax treatments. But in our case they are roughly the same because ISOs purchased and sold in the same year fall back to NSO taxes.

The spread between strike and FMV is treated as income, and any gain after is subject to capital gains. In this case it's short-term capital gains, because he's held the options for less than one year. The one nuance is that income tax from ISO spreads is not subject to FICA, FUTA, or federal income tax withholding.

Because NSOs are subject to FICA, Arjun will have to pay an additional 0.9% in Medicare tax. Plus another 3.8% for Net Investment Income Tax (NIIT). And we haven't even gotten to state yet.

As an Anthropic engineer, Arjun is most likely living in San Francisco or New York City — both of which have some of the highest income taxes in the country. New York City would be a brutal additional hit.

We might not feel bad for someone who's going to liquidate $2.6M. But we've all felt the pain of losing money to taxes. Because that money feels like it belongs to us, and it's being taken away.

Early exercising

There is one nuance with the offer that was overlooked: Anthropic allowed employees to exercise early.

Early exercising allows employees to buy options before they vest. When you do this early, the gap between strike price and fair market value can be virtually zero, meaning no spread, and therefore no income tax at the time of exercise.

If we went back in time to December 2023 when Arjun received the initial offer and replanned his equity, there are some interesting learnings. Let's say he leverages a portion of his savings, and every paycheck he exercises a few thousand shares (remember his base salary is $300K). Conservatively, between December 2023 and April 2025 he could have at least ~10,667 options.

Assuming there wasn't much spread between strike and fair market value, a side-by-side comparison of the two scenarios illustrates the difference.

What's your next move?

Valuations are great, but liquidity and tax strategy are what actually build wealth. It's difficult to keep track of every rule, every deduction, every tax hit you'll run into along the way.

Part of the learning is Arjun didn't have $1.44M to pay for his options upfront, so he did nothing.

People feel like these kinds of difficult, complex decisions are all-or-nothing — but they don't have to be. Even finding a strategy to obtain 10,667 options earlier meant saving nearly $600,000 that he didn't have to pay in taxes. $600K back in his pocket.

That's hard to come up with on your own. If you have equity and want to see exactly how these tax rules will hit your specific situation, let's chat.