RSU Tax & Take-Home Calculator

When your restricted stock units (RSUs) vest, their full value is treated as ordinary income and taxed right away — usually by your employer selling some shares to cover the taxes. This calculator estimates how much is withheld and how many shares you actually walk away with. It also flags the trap that surprises many people at tax time: standard withholding is often less than what you truly owe.

How RSUs are taxed at vesting

Here is the part that trips people up: you are taxed when RSUs vest, not when you sell. On the vesting date, the full market value of the shares is treated as ordinary income, exactly like salary. Your employer typically handles the tax by withholding a portion — most commonly through "sell-to-cover," where they automatically sell enough of the newly vested shares to pay the taxes and hand you the rest.

So if 100 shares vest at $150, that is $15,000 of ordinary income added to your paycheck for the year, and a chunk of those shares is sold on the spot to cover the tax bill.

The 22% withholding trap

This is the single most important thing to understand about RSUs. Employers usually withhold federal tax on RSUs at the flat supplemental wage rate, which is commonly 22%. But if you are a higher earner, your actual marginal tax rate might be 32%, 35%, or more. That gap means 22% withholding can leave you under-withheld — and you discover the shortfall as a surprise tax bill when you file.

The calculator lets you enter your true marginal rate to see the potential gap. If your real rate is well above the withholding rate, it is wise to set money aside (or adjust your other withholding) so the shortfall does not catch you off guard in April.

What actually gets withheld

Beyond federal income tax, an RSU vest is generally subject to Social Security and Medicare taxes (FICA, 7.65% combined, though Social Security only applies up to the annual wage base) and any state income tax. Add those up and the total withholding on a vest can be substantial — often a third or more of the gross value once you are in a higher bracket. What remains, in shares or cash, is what you actually keep.

A worked example

Imagine 100 shares vesting at $150, for $15,000 gross. With 22% federal supplemental withholding, 5% state, and 7.65% FICA, roughly $5,200 is withheld, leaving about $9,800 in value — and around 35 shares are sold to cover the taxes, so you keep about 65. But if your true marginal federal rate is 32%, the 22% withholding fell short, and you may owe the difference at tax time. Seeing that gap ahead of time is what separates a smooth April from a stressful one.

Smart moves after a vest

• Check your withholding gap. If your marginal rate exceeds the 22% supplemental rate, plan to cover the difference.
• Decide whether to hold or sell. Once vested, the shares are yours; holding them is a fresh investment decision, and concentration in your employer's stock carries risk.
• Mind future gains. If you hold and the price rises, selling later triggers capital gains tax on the increase above the vest-date value.

Frequently asked questions

Am I taxed again when I sell? You are taxed on any gain above the vest-date price. The vest value was already taxed as income; only the additional appreciation is subject to capital gains when you sell.

Why did I get a surprise tax bill from RSUs? Almost always because 22% federal withholding was lower than your actual marginal rate. The shares were taxed correctly as income, but not enough was withheld.

Should I sell my RSUs right away? That is a personal investment decision. Many advisors caution against holding a large, concentrated position in a single company — including your employer — but the right choice depends on your situation.

This calculator is for general educational purposes only and is not personalized tax or financial advice. Withholding rules and rates change and depend on your circumstances. Consult a qualified tax professional.