RSU Tax Calculator (Restricted Stock Units)
Model the full federal tax cost of RSU vesting (ordinary income) and subsequent sale (capital gains).
How RSUs Are Taxed
RSUs are taxed at vesting, not at grant. When RSUs vest, the fair market value of the vested shares is ordinary income — added to your W-2 wages. Federal supplemental withholding is a flat 22% (37% for amounts over $1M of supplemental wages in the year). State withholding and FICA (Social Security + Medicare, 7.65%) also apply. Many high earners are UNDERWITHHELD because the 22% supplemental rate is below their true marginal rate (32-37%).
After vesting, you hold the shares with a cost basis equal to the vesting price. Any subsequent appreciation is capital gain (short or long-term). Source: IRS Publication 15-A, Section 83. Last updated: May 2026.
The Same-Day Sale Default
Most public-company RSU vests trigger a same-day sale via your broker (E*TRADE, Schwab, Morgan Stanley). The company sells enough shares to cover the 37% supplemental tax withholding, you receive the remainder in cash or shares. Then you can sell the rest the same day to fully diversify, hold for long-term cap gains, or DCA out.
Same-day sell rationale: you're already exposed to your employer through salary, 401(k) match, and continued vesting. Holding additional vested shares concentrates risk in one company. Most CFAs advise selling at least 80% of vested RSUs same-day and diversifying.
Avoiding the April 15 Surprise
If your marginal rate exceeds 22% federal (most professionals), the 22% supplemental withholding is insufficient. Year-end you owe additional federal tax. Fixes: (1) Increase your W-4 additional federal withholding to cover the gap, (2) Pay quarterly estimated tax (Form 1040-ES), (3) Set aside the difference in cash at each vesting event.
Critical example: $250K base salary + $200K RSU vest. The 22% withholding on $200K = $44K. True federal tax at 32% marginal = $64K. Gap = $20K owed April 15. Plus state. Plan ahead.
RSU Cliff Vesting vs Graded Vesting
Cliff vesting: all-at-once after a period (e.g., 100% after 1-year cliff). Risky — leaving before cliff forfeits ALL RSUs. Graded vesting: incremental (e.g., 25% per year over 4 years, or 1/16 quarterly after 1-year cliff). Smoother tax exposure. Most US tech companies use 1-year cliff + quarterly/monthly vesting thereafter. Source: Schwab Equity Comp Guide.
Frequently Asked Questions
When are RSUs taxed?
At vesting, not at grant. When RSUs vest, the fair market value becomes ordinary income on your W-2. Withholding is 22% federal flat (37% above $1M supplemental wages) plus state and FICA. The shares you keep have a cost basis equal to the vesting price.
How much should I save for RSU taxes?
Depending on your marginal rate, you may owe an additional 5-15% on top of the 22% withholding. For a $100K vesting, set aside $10K-$15K beyond what's withheld. Use Form 1040-ES quarterly or increase W-4 additional withholding. Don't be caught short in April.
Should I sell RSUs immediately or hold?
Same-day sell is the financial default for most employees. You're already concentrated in your employer through salary and future vests. Holding adds risk without unique tax benefit (the tax was already paid at vest). Holding 1+ year for long-term cap gains only matters on the APPRECIATION after vest, which has no special privilege.
Do RSUs trigger AMT?
No \u2014 unlike ISOs. RSU income is ordinary income subject to regular tax only. The 0.9% Additional Medicare Tax and 3.8% NIIT may apply if your income exceeds those thresholds, but no AMT preference item is created by RSU vesting.
Can I refuse RSU vesting?
Practically no. RSUs vest automatically per the grant schedule. You can elect to receive shares and not sell them, but the vesting event itself (and the tax) is unavoidable once you meet the vesting conditions. The only way to 'refuse' is to leave the company before vesting (forfeit) \u2014 typically a bad financial decision.
How are RSUs different from stock options?
RSUs are direct grants of stock that vest over time \u2014 no exercise required, no exercise price. Stock options are the RIGHT to buy stock at a fixed price. RSUs always have value (as long as stock price > $0); options can be 'underwater' (strike price > current FMV). Tax treatment also differs \u2014 see our stock options calculator.