RSU Tax Calculator (2026)

When RSUs vest, the shares' fair market value is W-2 income — taxed at your marginal federal rate, plus FICA, plus state income tax. Your company withholds at the IRS supplemental wage rate (a flat 22% federal for most), but if your total comp is $200K+, your actual marginal rate is almost certainly higher. The gap lands as a tax bill every April.

Enter your vest details to see the full after-tax picture and the withholding gap you'll need to cover.

Why most tech workers owe extra at tax time

The IRS requires employers to withhold federal tax on RSU vests at the "supplemental wage" rate: a flat 22% for cumulative supplemental wages under $1M in the year, and 37% above that threshold. The 22% rate is easy to administer but ignores your actual bracket. If your salary is $300K and a $100K vest is withheld at 22%, you walk away with $78K — but the taxes actually owed at your 35% marginal rate are $35K. The $13K gap (and state tax shortfall on top) is due in April.

The IRS treats this as your responsibility, not your employer's. If you consistently owe more than $1,000 at filing, you may also face underpayment penalties — typically 7–8% annualized on the shortfall. The fix is either a W-4 adjustment (check box 4c for additional per-paycheck withholding) or quarterly estimated tax payments via Form 1040-ES after each large vest.

The California compounding problem

California taxes RSU income as ordinary income at rates up to 13.3% — and unlike the federal government, California provides no preferential rate for long-term capital gains. A Bay Area engineer at $400K total comp (single) faces a combined marginal rate of roughly:

• Federal income tax: 35% (marginal rate on income $256K–$641K)¹
• California income tax: 10.3% (marginal rate on income $371K–$446K)⁵
• Additional Medicare Tax: 0.9% (wages above $200K single)⁴
• California SDI: 1.1% (no wage base cap since January 2024)⁵
• Combined marginal rate: ~47–48% on each additional RSU dollar

Washington-based tech workers (Seattle, Bellevue, Redmond) have no state income tax, keeping their all-in rate roughly 11–14 percentage points lower on the same comp. That difference compounds significantly over a career.

Tax strategies to reduce your RSU burden

Max pre-tax vehicles before the vest hits

• 401(k) pre-tax deferral. 2026 limit: $24,500 employee contribution ($32,500 at age 50+; $35,750 at ages 60–63 with the SECURE 2.0 super catch-up).² Every pre-tax dollar you contribute reduces the income base before RSU income layers on top — and reduces your marginal bracket.
• HSA if on an HDHP. $4,400 (self-only) / $8,750 (family) in 2026, triple tax-advantaged.³ Contributions also reduce FICA taxable wages, making them more valuable than traditional IRA contributions for W-2 employees.
• NQDC deferral (senior employees). If your company offers non-qualified deferred compensation, you can irrevocably elect — before the start of the performance year — to defer RSU income to future lower-income years. Effective, but carries unsecured creditor risk. See our NQDC guide.

Managing the shares after vest

• Sell immediately. Your cost basis equals the FMV at vest. Selling within days produces minimal gain or loss — effectively no additional capital gains tax. This eliminates concentration risk and simplifies tax reporting.
• Hold 12+ months for long-term capital gains. Any appreciation beyond the vest price is taxed at preferential LTCG rates (0%, 15%, or 20% federal). Note: California taxes capital gains as ordinary income regardless of holding period — this federal benefit is diluted if you're a CA resident.
• Tax-loss harvesting coordination. If you hold appreciated RSU stock alongside other positions with embedded losses, selling both in the same year offsets gains. See our concentrated stock guide.
• Donate appreciated shares to a DAF. If RSU shares have appreciated since vest, donating directly to a Donor-Advised Fund gives you a full-FMV deduction (up to 30% of AGI for appreciated stock) with no capital gains recognition. More effective than selling and donating cash.

Withholding management

• After each large RSU vest, run the numbers in this calculator and compare to your YTD federal withholding.
• If you're consistently underwithheld, add a flat dollar amount to your W-4 Line 4c. This smooths out the April bill without requiring you to track quarterly estimates.
• Alternatively, pay estimated taxes by the quarterly deadlines (typically April 15, June 15, September 15, January 15) using IRS Direct Pay. Pay by the quarter following each large vest event.