RSU Tax Withholding Shortfall Calculator
Most employers withhold 22% federal on RSU vesting — but high earners are in the 32-37% bracket. The shortfall often produces a five-figure tax bill at year-end. Calculate yours and plan ahead.
| RSU vesting value | — |
| Employer federal withholding | — |
| Real federal tax on RSU (your bracket) | — |
| Federal shortfall (under-withheld) | — |
| Plus NIIT 3.8% (if income > threshold) | — |
| Plus Additional Medicare 0.9% | — |
| April 15 estimated payment to avoid penalty | — |
When RSUs vest, your employer typically withholds 22% federal income tax (the statutory supplemental rate). For high earners in the 32-37% bracket, this under-withholds by 10-15 percentage points — producing a five-figure tax bill at filing. The shortfall plus Additional Medicare Tax (0.9% on combined wages > $200K) creates the dreaded RSU April surprise.
The 22% Supplemental Withholding Problem
IRS treats RSU vests as supplemental wages — withheld at 22% (or 37% over $1M YTD). If your salary + RSU income puts you in the 32-37% bracket, the 22% withholding leaves a 10-15 pt shortfall. On $400K of RSU vests, that's $40K-$60K owed at filing.
How to Fix Before April
(1) W-4 additional withholding: line 4(c) extra federal withholding from regular paychecks to cover the gap. (2) Q4 estimated payment: IRS Direct Pay before January 15 quarterly estimate deadline. (3) Ask for 37% supplemental rate at vesting (some employers allow). (4) Sell more shares at vest: net the additional shares against the tax shortfall.
Don't Forget State Tax
Many states (CA 13.3%, NY 10.9%, HI 11%) tax RSU income heavily. State withholding on RSUs is often also under-withheld at flat rates. California typically withholds 10.23% on RSUs but top bracket is 13.3% — another 3 pt shortfall on already-large tax bills.
Last updated May 2026. Sources: IRS Pub 15 Withholding, IRS Form W-4.