Intergtm

RSU Vesting Tax Estimator

Estimate the federal, state, and FICA tax due when your restricted stock units vest, and the shortfall your employer's flat withholding leaves behind.

Inputs

Fair market value on the vest date. This sets your ordinary income and cost basis.

Salary and bonus already paid, excluding this vest. Used for wage-base limits.

%

Enter the bracket you expect to land in for the year, not the withholding rate.

%

Prior vests and bonuses. Affects which flat withholding rate applies.

Results update as you type, and the address bar keeps your numbers so the link you share reopens this exact calculation.

Gross vest value

$36,800

400 shares at 92

Estimated total tax

$14,346

Withholding shortfall

$3,680

Set this aside — it is due with your return or as an estimated payment.

Detailed results
Estimated employer withholding$10,666
Shares likely sold to cover116
Net value after tax$22,454
Effective tax rate on vest38.98%

What this result means

Gross vest value: $36,800.

This vest is worth $36,800 as ordinary income and carries roughly $14,346 of tax. Your employer's flat supplemental withholding falls about $3,680 short, so set that amount aside now — it comes due with your return or as an estimated payment, long after the shares have moved in price.

How this is calculated

gross = shares x price_at_vest
tax = gross x (marginal_federal + state) + social_security + medicare
shortfall = tax - employer_withholding

RSUs are wages, not stock trades

On the day your restricted stock units vest, the full fair market value of those shares becomes ordinary compensation. It appears in Box 1 of your W-2 alongside salary, and it is subject to income tax plus Social Security and Medicare. Nothing about the transaction resembles a capital gain: you did not buy the shares, so there is no purchase price to subtract. The vest-date value becomes your cost basis for later, and only the movement in price after that day produces a capital gain or loss.

This distinction is the source of nearly every RSU tax surprise. People see "stock" and assume favourable long-term treatment, then discover in April that the entire vest was taxed as salary.

Why withholding usually falls short

Employers do not compute your marginal rate on a vest. They apply a flat statutory supplemental withholding rate to the value, and a second, higher flat rate once your cumulative supplemental wages exceed the annual threshold. That flat rate is convenient for payroll systems, but if your marginal bracket exceeds it, the withholding covers only part of what you owe.

The gap grows with the size of the vest. A modest grant at a middle bracket may be roughly covered. A large vest that pushes you into a top bracket can leave a shortfall running into five figures, payable when you file. The Withholding shortfall figure above is the number worth acting on: either set that cash aside, make an estimated tax payment, or increase withholding on your regular paycheck for the rest of the year.

Sell-to-cover and share counting

Most plans default to sell-to-cover, meaning the broker sells enough vested shares to satisfy withholding and delivers the remainder. The Shares likely sold to cover line estimates that count. Because the sale happens at or near the vest price, it usually generates a negligible capital gain or loss — sometimes a small loss after commissions, which is still reportable.

If your plan instead offers net share settlement, the mechanics differ but the tax result is the same.

Concentration risk sits behind the tax question

Holding vested shares is economically identical to receiving cash and immediately buying your employer's stock. Very few people would choose to put a large fraction of net worth into a single stock that also pays their salary. The tax calculation above tells you what you keep; the harder question is whether you want to keep it in that particular company.

What this estimator will not tell you

It does not run the federal bracket table, apply deductions or credits, model the alternative minimum tax, or handle state-specific rules such as multi-state allocation for shares earned while working in another state. Treat the output as a planning figure that tells you the order of magnitude of the cash you need to reserve, and confirm the final number with a preparer if the vest is large.

Assumptions

  • RSUs are taxed as ordinary wage income on the vest date at fair market value.
  • You entered your true marginal federal rate; the calculator does not run the full bracket table.
  • State tax is applied as a flat rate with no deductions, credits, or local tax.
  • Statutory FICA rates, wage base, and supplemental withholding rates are placeholders until verified against the cited IRS and SSA sources.
  • No 83(b) election, deferral plan, or qualified equity election is modelled.
  • Any gain or loss after the vest date is a separate capital gains event and is not included.

Frequently asked questions

›Are RSUs taxed twice?

No, though the timing can make it feel that way. On the vest date, the fair market value of the shares becomes ordinary wage income taxed at your marginal rate plus FICA. This is the only tax on the vest itself. If you hold those shares and later sell them for more than the vest-date value, the additional appreciation is taxed separately as a capital gain. The vest-date value (which you already paid tax on) becomes your cost basis, so you are not paying tax on the same dollar twice—only on the growth beyond that basis.

›Why did my employer withhold less tax than I owe on my RSUs?

Employers use a fixed federal supplemental withholding rate set by the IRS (currently 22% for amounts under a threshold and 37% for amounts above), not your individual marginal tax bracket. If your actual marginal rate is higher—which is common for high earners whose RSUs push them into top brackets—the flat withholding falls short of what you ultimately owe. The shortfall must be paid when you file your tax return or via estimated tax payments during the year to avoid penalties.

›What is my cost basis for RSU shares?

Your cost basis is the fair market value of the shares on the vest date—the same figure reported as Box 1 wage income on your W-2. This becomes the purchase price for calculating any future capital gain or loss when you sell. Some brokers incorrectly report a zero basis on Form 1099-B; if yours does, you must track and report the correct basis yourself or you will face a tax bill on the entire sale proceeds rather than just the appreciation.

›Should I sell my RSUs immediately after vesting?

Selling at vest or shortly after realizes the value you were already taxed on, with minimal additional tax consequences (only the small bid-ask spread, if any). More importantly, it decouples your investment decision from your compensation: you received salary, it was taxed, and now you can choose whether to hold your employer's stock. Many employees hold out of inertia or blind loyalty, which concentrates wealth in a single stock that also carries their job risk. The tax treatment is identical whether you sell or hold; the difference is purely an investment and risk-management choice.

›Do RSUs affect my Social Security and Medicare taxes?

Yes, significantly. RSU value is ordinary wage income subject to both Social Security and Medicare taxes. Social Security tax applies only up to an annual wage base ($168,600 in 2025), so if you have already met that base through salary earlier in the year, the RSU vest will not incur additional Social Security tax. Medicare applies to the full RSU value at 1.45%, plus an additional 0.9% rate for high earners exceeding an annual threshold ($200,000 for single filers). These FICA taxes are withheld by your employer alongside federal income tax withholding.

›Can I make an 83(b) election on RSUs?

Generally no—83(b) elections do not apply to RSUs. An 83(b) election is available only for restricted stock awards (shares issued and held in your name, subject to a vesting restriction), not for RSUs (contractual units that represent a promise to issue shares). Since RSUs do not exist as issued property until they vest, there is nothing to elect on. Many companies offer separate deferral or exercise windows that provide some tax flexibility, but those are plan-specific and should be reviewed with your company's equity administrator.

›How do I avoid an underpayment penalty after a big vest?

The IRS imposes an underpayment penalty if you do not pay enough tax throughout the year. After a large RSU vest, you have two options: make an estimated tax payment via Form 1040-ES in the quarter the vest occurs, or increase the federal withholding on your regular salary paycheck for the remainder of the year to cover the shortfall. A safe-harbour threshold applies: if your total payments and withholding equal or exceed 100% of your prior year's tax (or 110% for high earners), you generally avoid penalties even if your current-year tax is higher.

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