RSU Vesting Tax Calculator (US)

RSU Tax Guide for US Employees

How RSUs Are Taxed

When RSUs vest, the FULL VALUE is taxed as ordinary income — exactly like a cash bonus. You don't have to sell to owe tax. Example: 200 shares vest at $150/share = $30,000 added to your W-2 income. This income is subject to: federal income tax (at YOUR marginal rate, not the 22% withheld rate), state income tax, Social Security (up to wage base), Medicare (with additional 0.9% over $200k single/$250k MFJ), and 3.8% NIIT if you sell at a gain in same year. After vesting, your cost basis equals th

The Withholding Trap

Employers withhold federal tax on RSUs at the 22% supplemental wage rate (or 37% if you've already received $1M+ in supplemental wages this year). PROBLEM: most RSU recipients are in higher tax brackets. A high earner whose marginal rate is 35% only has 22% withheld — you OWE an extra 13% at tax time. On $100,000 of RSU vesting, that's $13,000 surprise tax bill in April. Most tech workers in their first year of significant RSU vesting are blindsided by this. Solution: increase W-4 withholding vi

Sell-to-Cover vs Same-Day Sale vs Hold

Three common approaches at vest: (1) SELL TO COVER — automatic sell of just enough shares to cover the 22% withholding. Keep remaining shares. Tax exposure remains for the under-withheld portion. (2) SAME-DAY SALE — sell ALL vested shares immediately. Cost basis = vest price, so essentially $0 capital gain (maybe small loss from execution slippage). Use proceeds to pay full tax + diversify. RECOMMENDED for concentrated single-stock positions. (3) HOLD ALL SHARES — keep all vested shares. You owe

Concentrated Position Risk

Single-stock concentration is the #1 wealth-destruction risk for tech, finance, and biotech employees. Examples: Enron employees with 401(k) in company stock lost retirement and job same day. Theranos, Yahoo, Sears, Lehman, Bed Bath Beyond employees similar stories. Rule of thumb: no single company stock should exceed 10-15% of your net worth. RSUs make this hard — you receive shares quarterly or annually, and they pile up. Strategy: same-day-sale at every vest, redeploy proceeds into diversifie