Calculator
RSU tax calculator
Restricted stock units are taxed as ordinary wages on the day they vest, and your employer withholds at a flat statutory rate that is usually lower than the rate you actually owe. This calculator shows the withholding, the real tax, the gap between them, and the shares you keep after sell-to-cover.
This calculator runs in your browser and needs JavaScript. With scripts off you can still read the explanation below, which walks through the same maths by hand.
Running these numbers for a real decision? The calculator shows the mechanics. It cannot see your full return, your other income, or your state’s quirks. Before you act on a large vest, exercise or conversion, have a CPA or a fee-only advisor who works with equity compensation check the figures. Find a fee-only adviser near you or get matched.
How RSUs are taxed at vest
On the vest date the fair market value of the shares delivered to you becomes W-2 income, exactly as if your employer had paid you that amount in cash and you had bought the shares with it. It is subject to federal and state income tax, Social Security tax up to the annual wage base, and Medicare tax with no cap. The shares themselves have a cost basis equal to that vest-date price, so selling the same day creates almost no additional gain or loss.
Because the vest is a supplemental wage payment, the IRS lets employers withhold federal tax at a flat 22% rather than running it through the normal withholding tables. Once your supplemental wages for the year pass $1,000,000 the rate on the excess jumps to 37%. Most states either publish a flat supplemental rate (California’s is 10.23% on stock compensation) or apply their regular withholding; states with no income tax withhold nothing.
Why 22% is probably not your tax rate
A single filer whose salary alone puts them in the 24% bracket will see a large vest push income into the 32%, 35% or 37% brackets. The employer still withholds 22% on the whole vest. The difference is owed with your return the following April, and if it is large enough you can also owe an underpayment penalty. Read the full RSU tax guide for the mechanics and the safe-harbour rules.
The fix is administrative: submit a new Form W-4 with additional withholding per paycheck, make a quarterly estimated payment, or simply move the gap into a savings account the day the vest lands. The calculator’s “gap” figure is the amount to cover.
Sell-to-cover and net shares
Most plans sell enough shares at vest to cover the withholding and deliver the rest. If 500 shares vest at $180 and total withholding is $33,000, the plan sells 184 shares (rounding up) and delivers 316. You still owe tax on the full $90,000 of income; the sold shares just prepaid part of it. The alternative, where you pay the withholding in cash and keep every share, is available at some employers and increases your concentration in company stock.
Selling later: basis and holding period
Your cost basis is the vest-date price multiplied by the shares you received, not zero. Brokers often report a $0 or incorrect basis on Form 1099-B for RSU shares because the income was reported on your W-2 instead, and taxpayers who copy the 1099-B figure pay tax twice on the same money. Use the broker’s supplemental statement and Form 8949 to correct it. Gains on shares held for more than one year after vest are long-term; shares sold within a year produce short-term gains taxed as ordinary income. High earners also pay the 3.8% net investment income tax on gains above the threshold.
Worked example
| Input | Value |
|---|---|
| Shares vesting | 500 at $180 = $90,000 |
| Other wages | $200,000, single filer, California |
| Federal withheld at 22% | $19,800 |
| Federal actually owed on the vest (mostly in the 32% and 35% brackets) | About $30,000 |
| Federal gap | About $10,000 due in April, before the state gap |
Run your own numbers above; the state figure and FICA depend on your state and how much of the Social Security wage base your salary has already used.
Assumptions and limits
- Uses the current-year federal brackets, standard deduction, Social Security wage base and Medicare thresholds, and state brackets as published (the results say if a state’s tables are from the prior year).
- Assumes the standard deduction, no itemised deductions, no credits, no other investment income, and that all wages are earned in one state.
- Treats the vest as the only supplemental payment unless you enter earlier bonuses and vests.
- Ignores local income taxes (New York City, Philadelphia and others) and the Washington capital gains excise tax.
- It is an estimate for planning, not tax advice; your return will differ.
Frequently asked questions
Are RSUs taxed twice?
No. Income tax applies once at vest. Any later change in price is a capital gain or loss measured from the vest-date basis. Double taxation only happens through the 1099-B basis error described above, and it is correctable.
Should I sell at vest?
Selling at vest costs almost nothing in extra tax, because the basis equals the price. Holding is a decision to buy more of your employer’s stock with after-tax money. Most planners treat selling as the default and holding as the deliberate exception.
What if I moved states during the vesting period?
Many states, California most aggressively, tax the portion of the vest earned while you worked there even if you live elsewhere at vest. The calculator uses a single state; a multi-state vest needs a tax professional.
How do Amazon, Google and Microsoft schedules differ?
See the vesting schedule calculator for dated schedules, or the company guides for Amazon, Google and Microsoft.