RSU Tax Calculator
Estimate your tax liability on vesting RSUs. Get educational federal, state, and FICA breakdowns, withholding guidance, and sell-strategy comparisons to better understand your take-home equity compensation.
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RSU Tax Calculator
Estimate your RSU tax and explore scenarios for tech equity compensation
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See your withholding gap in 3 minutes
The free Equity Snapshot shows the incremental federal, state, and payroll tax on this year’s vest, your employer’s estimated withholding, and whether you’re likely under-withheld — then save it as a plan to model multiple grants, compare a competing offer, and export a report.
How RSU Taxation Works
Restricted Stock Units (RSUs) are taxed as ordinary income at vesting, not at grant. The IRS treats the full fair market value as W-2 wages, just like your base salary. Here's the complete tax breakdown:
Example: 100 RSUs vest at $200/share = $20,000 income
| Federal Income Tax (32% bracket): | -$6,400 |
| California State Tax (9.3%): | -$1,860 |
| Social Security (6.2%): | -$1,240 |
| Medicare (1.45%): | -$290 |
| Additional Medicare (0.9% over $200K): | -$180 |
| Net Take-Home: | $10,030 |
Effective tax rate in this example: 49.85%. RSU vests are taxed as ordinary income, so a large vest can leave you under-withheld when an employer only withholds at the flat supplemental rate. (RSU vesting does not itself trigger the Alternative Minimum Tax — AMT is generally an incentive stock option (ISO) consideration, not an RSU one.)
Common RSU Tax Mistakes (And How to Avoid Them)
✗ Mistake 1: Under-Withholding
The Problem: Employers withhold RSUs at the flat 22% supplemental rate, but you owe your marginal rate (32-37% for high earners). A $100K RSU vest withheld at 22% leaves you owing $10K-$15K extra at tax time.
Something to consider: Use this calculator to estimate your likely marginal rate. Some people explore adjusting their W-4 withholding or making quarterly estimated payments to reduce a surprise at tax time. A qualified tax professional can help you decide what fits your situation.
✗ Mistake 2: Not Diversifying
The Problem: Holding all vested RSUs means you're double-exposed to company risk (salary + stock). If the company tanks, you lose both your job and your savings.
Something to consider: One approach some investors weigh is selling a portion of vested RSUs to diversify into other holdings such as broad index funds, balancing concentration risk against potential company upside. There is no single right percentage — the trade-off depends on your goals and risk tolerance, and a qualified financial advisor can help you think it through.
✗ Mistake 3: Ignoring State Tax Implications
The Problem: If you're planning to relocate, timing matters. Vesting $500K of RSUs in California (13.3% state tax) vs Washington (0%) is a $66,500 difference.
Something to consider: Your state of residence when RSUs vest can meaningfully affect your tax — some states (e.g., TX, FL, WA, NV, TN) have no state income tax while others (e.g., CA) are high. Residency and multi-state sourcing rules are complex, so consult a qualified tax professional before making relocation or timing decisions based on taxes alone.
✗ Mistake 4: Confusing RSU tax with AMT
The confusion: RSUs are taxed as ordinary income at vesting and do not themselves trigger the Alternative Minimum Tax (AMT). AMT is generally a concern for incentive stock options (ISOs), where the bargain element at exercise can be an AMT preference item — a different mechanism from RSU ordinary-income treatment.
Something to consider: If you hold ISOs alongside RSUs, or have a large or unusual tax year, a CPA can help you understand how the pieces interact. This tool estimates RSU ordinary-income tax only.
Advanced RSU Tax Strategies
Strategy 1: 83(b) Election for Early-Stage RSUs
At very early-stage startups, you can sometimes negotiate to convert RSUs to restricted stock and file an 83(b) election. This lets you pay tax on the initial (low) valuation and convert all future gains to long-term capital gains.
Only works if stock has minimal value. Not available at public companies.
Strategy 2: Donor-Advised Fund (DAF) for Appreciated Shares
If you hold RSUs >1 year post-vest and they've appreciated, donate them to a DAF. You get a deduction for the full market value, avoid capital gains tax, and can donate to charities over time.
Requires holding period and appreciation. Best for large charitable goals ($10K+).
Strategy 3: Tax-Loss Harvesting with Company Stock
If your company stock drops post-vest, sell the losers to realize capital losses (up to $3K/year deductible against ordinary income, unlimited against gains). Then immediately buy an index fund to maintain market exposure.
Wash sale rule doesn't apply if you buy a different security (e.g., sell GOOG, buy VOO).
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