Estimate taxes on your Restricted Stock Unit (RSU) vest and see what you might still owe after company withholding.
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Restricted stock units (RSUs) are taxed as ordinary income at the time they vest. The fair market value of the shares on the vesting date is added to your W-2 income and subject to federal, state, and local income taxes. This applies regardless of whether you sell the shares immediately or hold them. Your employer typically withholds a portion at vesting to cover part of the tax bill.
The tax you owe depends on your total taxable income and marginal tax bracket. RSU income is taxed at your ordinary income rate, which can range from 10% to 37% federally. State and local taxes add to the total — in high-tax states like California or New York, the combined rate can exceed 50%. This calculator estimates your exact marginal rate based on your filing status, income, and location.
Usually not. Most companies withhold at the supplemental wage flat rate: 22% for RSU income up to $1 million and 37% above that. If your combined marginal tax rate is higher (common for high earners in states like California or New York), you will owe additional taxes when you file. This gap between withholding and actual tax due is one of the main problems this calculator helps you plan for.
The decision to sell or hold RSUs depends on your tax situation, liquidity needs, and outlook on the stock. Selling immediately locks in the current value and avoids future price risk. Holding may yield long-term capital gains treatment on any appreciation after vesting (taxed at lower rates after one year), but you bear the risk of the stock declining. If your company is pre-IPO, borrowing to cover the tax bill and holding shares for potential upside is another strategy this calculator models.
The IRS safe harbor lets you avoid underpayment penalties by prepaying enough tax during the year. You can meet it by paying at least 100% of your prior-year tax liability (110% if your AGI exceeds $150,000) or 90% of your current-year tax. Large RSU vests can push you well above prior-year income, making estimated payments or increased withholding important to avoid penalties.
Yes, in most states. RSU income is taxed as ordinary income at the state level. State tax rates vary significantly — from 0% in states like Texas and Florida to over 13% in California. Some employees relocate before a large vest to reduce state tax exposure. This calculator includes all 50 states and automatically applies the correct state tax rate to your RSU income estimate.
RSUs are a grant of shares delivered at vesting with no purchase required — they are taxed as income at their full market value on the vest date. Stock options (ISOs or NSOs) give you the right to buy shares at a set strike price. Options are only valuable if the stock price exceeds the strike price, and their tax treatment differs: ISOs may qualify for capital gains treatment, while NSOs are taxed as ordinary income on exercise. This calculator focuses specifically on RSU tax planning.
There are several strategies to manage the tax impact of RSU vests. Maximizing pre-tax retirement contributions (401k, HSA) lowers taxable income. Charitable giving of appreciated shares avoids capital gains. Tax-loss harvesting in brokerage accounts can offset gains. For larger amounts, cost segregation studies on short-term rental properties can generate significant deductions. This calculator includes a cost segregation module to model that strategy alongside your RSU taxes.