RSU Tax Impact Calculator

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.