RSU Tax Calculator

RSUs (Restricted Stock Units) are taxed as ordinary income in the year they vest — not when they were granted and not when you sell the shares. On the vesting date, the fair market value of the shares is included in your W-2 as wages, subject to federal income tax, Social Security, Medicare, and state income tax. Any subsequent gain or loss when you sell the shares is a separate capital gains event: if you hold the shares more than one year after vesting, you qualify for long-term capital gains rates; if you sell immediately, there is usually little to no additional gain.

Many employers withhold federal income tax on RSUs at the IRS supplemental wage flat rate of 22% (37% for amounts over $1 million). However, this is withholding — not your actual tax rate. If your marginal federal rate is higher than 22% (which is common for employees receiving large RSU grants), you may owe additional tax at filing. Conversely, if your marginal rate is lower, you may receive a refund. This calculator uses the aggregate (marginal) method to estimate the actual tax owed on your RSU income rather than the flat 22% withholding shortcut.

Yes, in most states RSU income is subject to state income tax as ordinary wage income. The state that has the right to tax the income depends on where you lived and worked when the shares vested, not just your current residence. If you worked in a high-tax state like California when some shares vested but have since moved, you may still owe California tax on the portion that vested while you were a California resident or nonresident employee. Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Unvested RSUs are typically forfeited when you leave a company — you lose any shares that have not yet vested as of your last day. Shares that vested before your departure are already yours (they were taxed at vest and converted to real shares or cash). Some employers offer accelerated vesting upon certain termination events such as layoffs, change of control, or retirement eligibility, depending on the grant terms. Review your grant agreement and equity plan documents to understand what happens in specific scenarios. If you were laid off, some companies also provide a short window for already-vested options (if applicable) to be exercised.

There are several strategies to reduce the tax burden from RSUs. Contributing to a traditional 401(k) or IRA can reduce your taxable income, potentially pushing some RSU income into a lower bracket. Holding vested shares for more than one year before selling converts future gains into long-term capital gains (taxed at 0%, 15%, or 20% depending on income) rather than ordinary income. Donating appreciated RSU shares to charity through a donor-advised fund can eliminate capital gains tax and provide a charitable deduction. Tax-loss harvesting — selling other losing investments in the same year to offset the RSU gain — is another option. Spreading large vest events across calendar years (if you have flexibility) can also help manage bracket exposure. Consult a tax advisor before taking action.

Yes. RSU income at vest is subject to both Social Security and Medicare taxes, just like regular wages. Social Security tax is 6.2% applied up to the annual wage base ($176,100 in 2025). If your salary and other wages have already reached the wage base before your shares vest, no additional Social Security is withheld. Medicare tax is 1.45% with no wage cap. An additional 0.9% Additional Medicare Tax applies to wages and self-employment income over $200,000 (single filers) or $250,000 (married filing jointly) — this threshold applies to your combined wages, not just RSU income.