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RSU Vesting Tax & Withholding Calculator

Calculate taxes owed on vesting Restricted Stock Units (RSUs), the IRS 22% statutory withholding shortfall, net take-home shares, and cost basis.

Calculated Results

Net Take-Home Shares After Tax
135 Shares
Net equity value: $24,300 (115 shares withheld for taxes)
Total Gross Vesting Value
$45,000
Taxed as W-2 ordinary income
Statutory Withholding Gap
-$5,850 Underwithheld
IRS 22% rule vs 35% actual bracket
Total Tax Liability Owed
$20,700 (46.0%)
Fed (35%) + State (9.3%) + FICA (1.7%)
New Cost Basis / Share
$180.00
Zero gain/loss if sold on vest day
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Frequently Asked Questions

How are Restricted Stock Units (RSUs) taxed when they vest?

When RSUs vest, their entire fair market value is treated as ordinary W-2 wage compensation and subject to federal income tax, state income tax, Social Security (if under cap), and Medicare tax. Your cost basis for future capital gains becomes the exact stock price on the vest date.

What is the IRS RSU 'withholding trap'?

By federal law, companies automatically withhold federal tax on supplemental wages under $1 million at a flat 22%. If your actual marginal tax bracket is 32%, 35%, or 37%, you will be severely underwithheld and owe thousands of dollars in surprise taxes on April 15 unless you make estimated quarterly payments.

What is 'Sell to Cover' in RSU vesting?

Under Sell-to-Cover, your brokerage automatically sells just enough vesting shares (roughly 35% to 50%) to remit required taxes to tax authorities, depositing the remaining net shares directly into your brokerage account.

Should you hold or immediately sell RSUs upon vesting?

Many financial planners recommend selling RSUs immediately upon vesting. Because you have already paid income tax on their full value, selling on vest day triggers virtually $0 in capital gains, allowing you to diversify into broad market index funds rather than concentrating wealth in your employer's stock.