Buying shares of company stock through an employee stock purchase plan is a great way to invest. Many employers provide a discount for purchasing company stock, and the investments can be automated through payroll deductions.

Employee stock purchase plans (ESPP) are taxed a little bit differently than regular capital gains. Like regular investments, any tax on the gain or loss of ESPP shares is deferred until the shares are sold or otherwise disposed of.

Unlike regular investments, gains on ESPP stock can be partly ordinary gains subject to the ordinary income tax rates and partly capital gains eligible for the 15% tax rate on long-term gains.