RSU Vesting Tax Calculator
Calculate income tax and social security owed when your RSUs vest. See exactly how many shares you keep after tax withholding — for US, UK, and Canada.
How RSU Vesting Tax Works
Restricted Stock Units (RSUs) are taxed as ordinary income at the moment they vest — not when they were granted. The taxable amount equals the number of shares vesting multiplied by the fair market value (FMV) on the vest date. This income is added to your other earnings for the year and taxed at your marginal rate.
Most employers automatically withhold tax by selling a portion of your vesting shares — a method called "sell-to-cover." The number of shares sold depends on your total estimated tax rate including federal/national income tax plus social security or national insurance contributions.
RSU Tax by Country
United States: RSU income is subject to federal income tax (10–37%), Social Security (6.2% up to the wage base), Medicare (1.45% + 0.9% additional for high earners), and state income tax (0–13.3%). The combined withholding rate in high-tax states like California can exceed 50% for top earners.
United Kingdom: RSUs are subject to Income Tax (20–45%) and Employee National Insurance (8% up to the upper earnings limit, 2% above). Employer NI is not your liability. The employer is required to operate PAYE, and most UK companies use sell-to-cover withholding.
Canada: RSU income is treated as an employment benefit under Section 7 of the Income Tax Act. Federal tax (15–33%) plus provincial tax applies. There is no CPP or EI on RSU income beyond the employment deduction threshold.
Sell-to-Cover vs. Cash Payment
When RSUs vest, your employer has two withholding options: sell-to-cover (they sell enough shares on your behalf to cover the tax, and you receive the remaining shares) or net settlement (they simply deliver fewer shares equal to your after-tax entitlement). A small number of employers allow cash payment of the tax bill instead.
This calculator models sell-to-cover — the most common method. The "Shares Sold to Cover" figure shows how many shares are liquidated to satisfy the withholding requirement, and you receive the remaining shares.
Planning Tips to Minimise RSU Tax
Adjust your W-4/tax code: If your RSU vesting pushes you into a higher bracket, update withholding on your salary to avoid an underpayment penalty at year-end.
83(b) election (US only): For shares with a vesting schedule tied to performance milestones (not pure time-based RSUs), an 83(b) election can lock in a lower taxable value at grant. Standard time-based RSUs do not qualify.
Hold period for CGT: After vesting, any future gain (or loss) relative to the vest-date price is treated as capital gains. Holding shares for 12+ months qualifies for long-term capital gains rates in the US (0–20%), which is significantly lower than ordinary income rates. Based on IRS Publication 525 and HMRC guidance on employment-related securities.