RSU Tax Impact Calculator
Estimate Restricted Stock Unit (RSU) tax impact across vest year and sale year — ordinary income, federal withholding gap, state tax allocation, and capital gains. Multi-year planning for graded vest schedules.
RSU vs RSA — Same Words, Different Tax
Restricted Stock Units (RSUs) are taxed at VEST as ordinary income. Restricted Stock Awards (RSAs) are different — actual shares granted upfront, can elect 83(b) at grant. Most public-company tech grants are RSUs not RSAs. Pre-IPO grants are sometimes RSAs to enable 83(b) — file within 30 days of grant to pre-pay tax at low FMV before company appreciates.
The Withholding Gap on RSU Income
Default federal withholding on supplemental wages (including RSU vest income): 22% if under $1M total annual supplemental wages, 37% on excess. Your actual marginal rate may be 24%, 32%, 35%, or 37%. Most high earners face under-withholding of 10-15%. Solution: have employer withhold at supplemental rate of 37%, or pay quarterly estimated taxes, or have spouse over-withhold.
State Tax Allocation on Vesting
RSU income is sourced to state where you worked during the vesting period. Multi-state moves create complex allocation: shares vesting after move are partly source-allocated to prior state based on workdays during vesting period. California aggressively pursues equity vested while employee worked in CA, even if employee moved before vest. Track work locations carefully — saved $20K-$50K in wrongful CA tax for many movers.
Sell at Vest vs Hold — Tax Lens
Sell at vest: capital gain/loss = $0 (sale price = cost basis). Hold and sell later: short-term (under 1 year) = ordinary rates, long-term = 0%/15%/20%. Many tech employees hold employer stock for emotional reasons — leads to concentrated risk and forced sell during downturn. Tax-optimal: sell at vest, diversify. Only hold if you'd buy more at current price independently.
Sources: IRS Pub 525, IRC §83, IRC §3402(a) supplemental wages. Last updated: May 2026. Not tax advice.
Frequently Asked Questions
When are RSUs taxed?
At vesting \u2014 ordinary income on W-2. Vesting FMV \u00d7 shares = taxable. Employer withholds (default 22%, higher rate optional). State tax also applies.
Why do I owe taxes in April even though employer withheld?
Default 22% supplemental rate UNDER-WITHHOLDS for high earners in 32-37% brackets. Gap of 10-15%. Solution: request 37% supplemental withholding from employer, or pay quarterly estimates.
Should I sell RSUs at vest or hold?
Tax-optimal: sell at vest (no additional cap gain). Holding employer stock = concentrated risk. Only hold if you'd buy more at current price independently. Most tech advisors recommend sell-at-vest plus diversification.
Does my state matter for RSU tax?
Yes. RSU income sourced to state where you worked during vesting period. CA: 13.3% top rate. NYC: 10.9% + 3.876% city. TX/FL/WA/NV/NH/TN: 0%. Multi-state moves create complex allocation.
Is this tool free?
Yes. 100% free, no sign-up. All math runs in your browser \u2014 your RSU data never leaves your device. Not tax advice \u2014 consult tax professional.