This RSU vesting withholding & take-home calculator shows your real after-tax value when restricted stock units vest in 2026 — and flags the dangerous under-withholding gap. Employers withhold federal income tax on RSUs at a flat 22% supplemental rate (37% over $1M), but if your true bracket is 32% or 35%, you can owe thousands more at tax time. Enter your vest value and year-to-date wages to see federal, Social Security, Medicare, and state withholding, your net, and the gap to set aside.
Restricted stock units (RSUs) are taxed as ordinary compensation income the moment they vest, not when you eventually sell. On the vest date, the fair market value of the shares (shares × price) is added to your W-2 wages, and your employer withholds federal income tax, Social Security, Medicare, and state tax — usually by selling or holding back a portion of the shares ("sell-to-cover"). The problem: the default 22% federal supplemental rate often under-withholds for high earners whose real bracket is 32% or 35%, leaving a surprise bill in April. This calculator shows both the withholding and the likely gap.
The IRS lets employers withhold federal income tax on supplemental wages (including RSUs) at a flat 22% as long as the total for the year is under $1 million. But a software engineer in the 32% bracket who vests $50,000 of RSUs has only 22% withheld — a 10-point shortfall, or roughly $5,000 under-withheld on that single vest. Multiply across multiple vests and the April balance due can reach five figures. The "under-withholding gap" line in the calculator quantifies exactly this, comparing the 22% withheld to your true marginal rate.
Once your year-to-date supplemental wages exceed $1 million, the portion above $1 million must be withheld at the top 37% rate — this is mandatory, not optional. Executives and senior engineers with large equity packages routinely cross this line mid-year, after which RSU withholding jumps from 22% to 37%. Select the 37% option in the calculator to model a vest that falls in the over-$1M tier.
Take an engineer who has already earned $150,000 in W-2 wages this year and vests $50,000 of RSUs, in a state with no income tax, whose true federal bracket is 32%.
| Withholding component | Rate | Amount |
|---|---|---|
| Federal supplemental | 22% | $11,000.00 |
| Social Security (room: $34,500 to cap) | 6.2% | $2,139.00 |
| Medicare | 1.45% | $725.00 |
| Total withheld | — | $13,864.00 |
| Net (as cash equivalent) | — | $36,136.00 |
| Under-withholding gap (32% − 22%) | 10% | $5,000 |
Although $13,864 was withheld, the engineer's true federal income tax on that $50,000 is about $16,000 (32%), so roughly $5,000 of additional tax will be owed at filing unless extra is set aside or estimated payments are made.
RSU income is also subject to FICA. Social Security (6.2%) applies only until your total wages hit the 2026 cap of $184,500 — so if you have already maxed it through salary, RSUs owe no further Social Security. Medicare (1.45%) applies to every dollar with no cap, and an additional 0.9% kicks in once total wages exceed $200,000 (single). The calculator tracks the Social Security cap using your year-to-date wages so it does not over-charge once you are past $184,500.
Most companies satisfy RSU withholding by sell-to-cover: enough vested shares are automatically sold to pay the tax, and you keep the rest. Some allow "net share settlement" (the company holds back shares) or cash withholding from your paycheck. Either way, the taxable event and the withholding amount are the same — the calculator's "take-home" represents the value you keep after the withholding portion is removed, whether in shares or cash.
Your cost basis in vested RSU shares equals the fair market value already taxed as ordinary income at vesting. When you later sell, you only owe capital gains tax on the change in price since vesting. A notorious error: broker 1099-B forms often report a $0 or wrong basis, causing taxpayers to pay tax twice on the same income. Always confirm your basis equals the per-share value reported on your W-2 at vest. This page calculates the vesting tax; the later sale is a separate capital-gains event.
If you sell vested shares within one year of the vest date, any gain is a short-term capital gain taxed at ordinary rates. Hold longer than a year and it becomes a long-term capital gain at the favorable 0%/15%/20% rates. Many employees sell immediately at vest (locking in zero additional gain) to diversify; others hold for long-term treatment but take on single-stock risk. The vesting tax modeled here is unavoidable regardless of when you sell.
RSU income is generally sourced to the state(s) where you worked during the vesting period, which can split a single vest across multiple states for employees who relocated. Some states withhold supplemental wages at their own flat rate; others use wage tables. High-tax states (California) can add 10%+ to the withholding, while no-tax states add nothing. Enter your state supplemental rate in the calculator; multi-state allocation requires deeper analysis.
RSUs are taxed as ordinary income at vesting with no purchase price. Non-qualified stock options (NSOs) are taxed on the spread at exercise; incentive stock options (ISOs) can defer tax but trigger AMT; and ESPP shares get a discount taxed partly as ordinary income. This calculator is specific to RSUs — the most common modern equity grant — because their "automatic income at vest" creates the withholding-gap problem the other instruments do not share in the same way.
The tool applies your chosen federal supplemental rate (22% or 37%) to the vesting value, adds Social Security (6.2% only on wages up to the $184,500 cap, using your year-to-date wages to find remaining room), Medicare (1.45% plus 0.9% additional above $200,000), and any state supplemental rate. Total withholding subtracted from the vest value gives your take-home. It then compares the 22%/37% federal withholding to your true marginal bracket to estimate the under-withholding gap you may owe at tax time. All 2026 rates are verified against IRS and SSA figures.
This calculator is for tech employees, startup and public-company staff, executives, and anyone receiving restricted stock units who wants to know their real after-withholding value and — more importantly — whether the standard 22% withholding leaves them owing thousands in April. It is especially valuable for high earners in the 32%-37% brackets and for anyone with vests that may cross the $1 million supplemental threshold.
Because RSU income stacks on your salary, a large vest can push part of your income into a higher bracket, trigger the additional 0.9% Medicare tax, or affect credits and phase-outs. If you can influence timing (for example, choosing when to sell shares after vest, or coordinating with a bonus), spreading income across tax years can smooth your marginal rate. Model each vest with the calculator before the date so you can adjust withholding or estimated payments in advance rather than discovering the gap at filing.
A common point of confusion: the famous Section 83(b) election — which lets you pay tax early on the grant-date value of restricted stock — generally does not apply to restricted stock units. RSUs are an unfunded promise to deliver shares later, not actual stock you own at grant, so there is nothing to make an 83(b) election on. (Restricted stock awards, or RSAs, are different and can be eligible.) That means RSU holders cannot lock in a low grant-date value; you are taxed at the vest-date fair market value whatever it turns out to be. The practical takeaway is that your tax bill rises and falls with the stock price between grant and vest, and you have no early-election lever to manage it — which makes the vest-date withholding analysis in this calculator the main planning tool available to you.
At vesting, the fair market value of the shares is added to your W-2 as ordinary income. Your employer withholds federal income tax (usually 22% supplemental), Social Security, Medicare, and state tax, often via sell-to-cover. You owe capital gains tax only on price changes after vesting when you sell.
Employers withhold federal income tax on RSUs at a flat 22% supplemental rate, but if your true marginal bracket is 32% or 35%, that leaves a 10-13 point shortfall. On a $50,000 vest that is about $5,000 under-withheld, which you must pay at filing.
Federal supplemental withholding is a flat 22% for the year's first $1 million of supplemental wages, and a mandatory 37% on the portion above $1 million. Social Security (6.2% to the $184,500 cap), Medicare (1.45% plus 0.9% over $200,000), and state tax also apply.
Not if you track your cost basis correctly. The vesting value is taxed once as ordinary income and becomes your basis. When you sell, you only owe tax on the gain since vesting. Double taxation happens only if a broker reports a $0 basis and you fail to correct it.
Yes, at 6.2%, but only on wages up to the 2026 Social Security cap of $184,500. If your salary already reached the cap, RSUs owe no additional Social Security. Medicare (1.45%) always applies, plus 0.9% more once total wages exceed $200,000.
Set aside the under-withholding gap, increase your paycheck withholding via a W-4 extra amount, or make a quarterly estimated payment for large vests. Some payroll systems also let high earners request a higher RSU withholding rate.
Sell-to-cover means your employer automatically sells just enough of your newly vested shares to pay the required tax withholding, and you keep the remaining shares. The taxable income and withholding are the same as if you had paid the tax in cash.