RSU tax calculator: restricted stock tax rate, withholding and RSU cost basis.
Enter the vest and your salary. This stacks the vest on top of your real income at the 2026 federal brackets, prices what the flat 22% withholding leaves you owing in April, and works out the capital gains tax on a later sale from the correct vest-date basis.
Other RSU calculators apply one flat rate and stop. The two numbers that actually cost you money are the gap between 22% and your real bracket, and the cost basis your broker prints on the 1099-B.
RSU tax calculator
The vest
Your employer withheld . Your actual federal rate on this vest is , so you are short before you sell a single share.
At this salary the flat withholding covers the vest, with over-withheld. That is a refund, not a saving, and it sat with the Treasury all year.
Selling the shares
| Basis used | Taxable gain | NIIT | Tax |
|---|---|---|---|
| Vest-date value Correct, per Pub. 525 | |||
| Zero, as reported What the 1099-B often shows $0 basis |
Filing the 1099-B as issued would cost you an extra on this sale, tax paid a second time on wages already in box 1 of your W-2. Correcting it is a basis adjustment on Form 8949.
Above $1 million of supplemental wages in a year the excess is withheld at 37%, not 22%, so set the withheld rate accordingly.
Federal only. Add your state rate, and use the capital gains tax calculator if you are selling other positions in the same year. Educational information, not tax advice.
In short
RSUs are taxed twice, at two moments and two rates. On the vesting date the full market value of the shares is ordinary wage income: IRS Publication 525 says that when the property becomes substantially vested "you must include its FMV, minus any amount you paid for it, in your income for that year." That amount lands in box 1 of your W-2 and carries Social Security and Medicare tax on top. Your employer withholds a flat 22% on it, because Publication 15 tells it to "withhold a flat 22% (no other percentage allowed)" on supplemental wages, and that rate ignores your salary entirely. If the vest pushes you into the 32% or 35% bracket, the difference is due with your return. The second tax comes only if you sell: the gain is the sale price minus the vest-date value, long-term if you held more than a year from vesting. The trap is that the cost basis your broker reports on Form 1099-B is what you paid out of pocket, which for an RSU is nothing, so accepting it means paying capital gains tax a second time on income already taxed as wages.
Last updated September 2026
RSU taxation
One grant, two taxable events, and only one of them is withheld
Almost every mistake people make with restricted stock units comes from treating the grant as the taxable moment. It is not. Nothing happens at grant. Publication 525 is clear that if the stock "is nontransferable or subject to a substantial risk of forfeiture, you don't include the value of the property in your income until it becomes substantially vested."
| Event | What is taxed | At what rate | Reported on | Withholding |
|---|---|---|---|---|
| Vesting date | Full market value of the shares that vested | Ordinary income, your marginal bracket, plus Social Security and Medicare | W-2 box 1, and boxes 3 and 5 | Withheld at a flat 22%, which is usually not your real rate |
| Sale date | Sale price minus the vest-date value | Long-term capital gains if held more than a year from vesting, otherwise ordinary | 1099-B, then Form 8949 and Schedule D | Nothing is withheld at all. You owe it with your return |
Source: IRS Publication 525, "Taxable and Nontaxable Income" (2025), Restricted Property; IRS Publication 15 (Circular E) for 2026, section 7.
The clock
Your holding period starts at vesting
Not at grant, which is the assumption that quietly costs people long-term treatment. Publication 525: "Your holding period for this property begins when the property becomes substantially vested." A four-year grant that vested last month is one month old for tax purposes, and selling now is a short-term gain at your full ordinary bracket.
The 83(b) question
You almost certainly cannot make one
A section 83(b) election accelerates tax to the transfer date and can be powerful for restricted stock awards at an early-stage company. It does not apply to ordinary RSUs, because an RSU is a contractual promise rather than a transfer of property. If someone tells you to file an 83(b) on your public-company RSUs, check the plan documents before you act.
The falling knife
A price drop after vesting does not undo the wage tax
The ordinary income was fixed on the vest date. If the stock halves the following week, you still owe tax on the vest-date value, and the decline is a capital loss usable against gains and then only $3,000 a year against ordinary income. People have owed six-figure tax bills on shares worth far less by April.
RSU tax withheld
Why is only 22% withheld on my RSUs?
Because the IRS classifies a vest as supplemental wages, and the flat method in Publication 15 allows exactly one rate: "Withhold a flat 22% (no other percentage allowed)." Your employer is not being careless and cannot be talked into a higher number under that method. The rate is fixed by regulation and it takes no account of what else you earn.
| Payroll takes | 2026 rate | Detail |
|---|---|---|
| Federal income tax on supplemental wages | Flat 22% | Publication 15, section 7. The excess above $1 million of supplemental wages in a year is withheld at 37% |
| Social Security | 6.2% up to $184,500 of wages | Publication 15. Once your salary alone passes the wage base, a vest adds no more Social Security tax |
| Medicare | 1.45% on everything | Publication 15. No wage base, no cap |
| Additional Medicare | 0.9% above $200,000 of wages | Withheld by the employer per employee, so a dual-income couple is commonly under-withheld and a single high earner over-withheld |
Source: IRS Publication 15 (Circular E), Employer's Tax Guide, for 2026. The Social Security wage base for 2026 is $184,500, which matters more than people expect: if your salary already exceeds it, a vest adds no further Social Security tax at all, and calculators that apply a flat 7.65% to the whole vest overstate the bill.
What the gap looks like
22% against a real bracket
A single filer on a $185,000 salary who vests $84,000 of stock pays roughly 28.9% federal on that vest once it is stacked on top of their salary, because the top of it reaches into the 32% bracket. Withholding at 22% collects about $18,500 of the roughly $24,300 due, leaving close to $5,800 outstanding.
Nothing about that is unusual. It is the arithmetic of a flat rate applied to a progressive schedule, and it repeats every vest. The fix is not to argue with payroll. It is to raise the withholding on your regular paycheck with a Form W-4 adjustment, or to make a quarterly estimated payment, so the money is not a surprise.
Above $1 million of supplemental wages in a calendar year the rule flips the other way. Publication 15 requires the excess to be withheld "at 37% (or the highest rate of income tax for the year)" regardless of your Form W-4, so a very large vest is often over-withheld rather than under.
RSU cost basis
Do I pay tax twice on RSUs?
Only if you file the 1099-B as it arrives. Your cost basis in vested RSU shares is the vest-date market value, the same figure your employer already put in box 1 of your W-2. Brokers do not report that. They report what you paid out of pocket, and for an RSU you paid nothing, so box 1e commonly shows zero or is left blank.
What the IRS says
The correction is your job, not the broker's
Publication 525 warns about exactly this, in the context of stock acquired through an equity compensation plan: "For options granted on or after January 1, 2014, the basis information reported to you on Form 1099-B won't reflect any amount you included in income upon grant or exercise of the option." Then the caution, which is the sentence to remember: "It's your responsibility to make any appropriate adjustments to the basis information reported on Form 1099-B by completing Form 8949."
In practice that means entering the proceeds and the reported basis as they appear, then adjusting the basis up to the vest-date value on Form 8949 so the gain reflects only the price change since vesting. Your plan administrator's supplemental statement, which is not the 1099-B, usually carries the correct figure.
The size of it
The error scales with how long you held
Sell at vest and the mistake is small, because the correct gain is near zero either way and the phantom gain is the whole sale price. Sell after three years of appreciation and the reported basis is still zero while the real basis has become the bulk of the value, so the overstatement is the entire vest-date amount. The calculator above prices both versions of the same sale.
This is also why lot selection matters once several vests have accumulated. Each vest is its own lot with its own basis and its own holding period, and the shares you choose to sell change the tax. The cost basis calculator runs the same sale through first in first out, specific identification and the rest, and only some brokers support highest in first out lot relief at all.
Sell to cover RSU
Should I sell RSUs as soon as they vest?
Selling at vest is the tax-neutral choice. You have already paid ordinary income tax on the full value, the shares carry almost no gain, and the sale costs you essentially nothing extra. Holding is a separate, active decision: it is a concentrated bet on one company, funded with after-tax money, in the same stock that already pays your salary.
Step 1
Understand what sell to cover did
Most employers sell enough shares on the vest date to fund the withholding and deliver the rest. Those shares are a real sale, reported on a 1099-B, but at essentially the vest price so the gain is near zero. It funds the flat 22%, not your bracket, so it does not close the gap the calculator shows.
Step 2
Count the whole position, not the vest
Four years of vesting adds up quietly, and the number that matters is what share of your net worth sits in one ticker whose fortunes also determine your job. The honest question is how much of your portfolio should be in one stock, answered before the next vest rather than after a drawdown.
Step 3
Decide how to unwind it
Once the position is large and appreciated, selling it outright triggers the gain in one year. The alternatives are staged selling, direct indexing around the holding, or an exchange fund with its seven-year lock-up. Each has a real cost, compared honestly in the guide to direct indexing with a concentrated stock position. If part of the position is employer stock sitting in a 401(k) rather than vested shares, run it through the net unrealized appreciation calculator first, because taking it out in kind can convert most of the gain to long-term rates.
A vest schedule is a rebalancing schedule
The useful way to think about a multi-year grant is that it hands you a large, predictable cash-equivalent payment several times a year, denominated in one stock. Every vest is therefore a scheduled opportunity to bring the portfolio back to the weights you actually chose, and to do it with shares that carry no embedded gain because they were just marked to market. Selling at vest and buying your target allocation is the cheapest rebalancing you will ever do. Waiting until the position has tripled means every correction now costs capital gains tax.
That is the part a calculator cannot decide for you, but it is worth setting the target weights in advance so the decision at each vest is mechanical rather than a fresh judgment about your employer's prospects. Building the target as an explicit custom index and letting the rebalancing rules tell you what to buy removes the argument you would otherwise have with yourself four times a year.
ESPP tax calculator
An ESPP is taxed on completely different rules
If your company also runs an employee stock purchase plan, do not reuse the RSU math. The calculator above models RSUs, where the whole value is wage income at vest. An ESPP works differently and the difference is worth real money. The same warning applies to stock options, which are taxed under a third set of rules again, compared after tax in RSU vs stock options.
What is taxed, and when
Under a qualified section 423 plan, buying the shares at a discount is not itself a taxable event. Nothing happens until you sell. At that point part of the profit becomes ordinary income and the rest is capital gain, and the split depends on how long you held the shares against two separate clocks: two years from the grant date and one year from the purchase date.
Meet both and it is a qualifying disposition, where the ordinary income is limited to the lesser of the actual profit and the discount measured at grant. Miss either and it is a disqualifying disposition, where the full discount at purchase becomes ordinary income whether or not the stock went up.
The same basis trap, one layer worse
For ESPP shares the broker reports the discounted purchase price, which is a real number you actually paid, so it looks correct at a glance. It still excludes the ordinary income element that hit your W-2 on the sale, so the basis is understated and the gain overstated in exactly the same way. Publication 525's instruction is identical: adjust the reported basis on Form 8949.
Because the correct basis depends on which disposition rule applies, ESPP is the single most common place where an otherwise careful return overstates a gain. Compare the plan's supplemental statement against the 1099-B line by line before you file, and price both dispositions with the ESPP tax calculator so you know which number belongs on Form 8949.
Restricted stock unit tax
Questions people actually ask about RSU tax
How are RSUs taxed?
RSUs are taxed twice, at two different moments and two different rates. On the vesting date the full market value of the shares is ordinary income, reported in box 1 of your W-2 and subject to Social Security and Medicare tax like salary. Publication 525 puts it plainly: when the property becomes substantially vested "you must include its FMV, minus any amount you paid for it, in your income for that year." If you later sell the shares, only the change in price since vesting is a capital gain, taxed at long-term rates if you held them more than a year from the vest date.
What is the RSU tax rate?
There is no single RSU tax rate. The value at vesting is taxed at your ordinary marginal bracket, which for 2026 runs 10%, 12%, 22%, 24%, 32%, 35% and 37%, plus 6.2% Social Security up to $184,500 of wages, 1.45% Medicare and another 0.9% Medicare above $200,000. What your employer withholds is a different number: a flat 22% under the supplemental wage rule. Any gain after the vest date is a capital gain instead, at 0%, 15% or 20% plus the 3.8% net investment income tax.
Why is only 22% withheld on my RSUs?
Because the IRS classifies an RSU vest as supplemental wages, and Publication 15 tells your employer to "withhold a flat 22% (no other percentage allowed)" when it uses the flat method. That rate is fixed by regulation, not chosen by your company, and it takes no account of your salary. If your total income lands you in the 32% or 35% bracket, 22% is not enough and the rest is due with your return. Above $1 million of supplemental wages in a year, the excess is withheld at 37% instead.
What is the cost basis of RSU shares?
The cost basis is the fair market value per share on the vesting date, the same figure your employer added to box 1 of your W-2. Publication 525 sets it out as the amount included in income, and your holding period "begins when the property becomes substantially vested." The number your broker prints on the 1099-B is usually not that. Brokers report what you paid out of pocket, and for an RSU you paid nothing, so box 1e often shows zero or is left blank.
Do I pay tax twice on RSUs?
Only if you file the 1099-B as issued. The vest is taxed once as wages, and the sale should be taxed only on the price change since vesting. When the broker reports a cost basis of zero, the return treats the entire sale price as gain and you pay a second time on income already on your W-2. The IRS is explicit that the fix is yours to make: "It's your responsibility to make any appropriate adjustments to the basis information reported on Form 1099-B by completing Form 8949."
Should I sell RSUs as soon as they vest?
Selling at vest is the tax-neutral choice, because you already paid ordinary income tax on the full value that day and the shares have almost no gain yet. Holding is an active decision to keep a concentrated bet on one company, funded with after-tax money, in the same stock that already pays your salary. If you hold and the price rises, more than a year gets you long-term rates on the appreciation. If it falls, you owe tax on a value you no longer have.
How much tax do I pay when I sell RSUs?
You pay capital gains tax only on the difference between the sale price and the vest-date value, not on the whole proceeds. Held more than a year from the vest date, that gain is long-term at 0%, 15% or 20% depending on total income, plus 3.8% net investment income tax if your modified adjusted gross income exceeds $200,000 single or $250,000 joint. Sold within a year, the gain is short-term and taxed at your full ordinary bracket.
What does sell to cover mean?
Sell to cover means the plan administrator sells just enough of your newly vested shares on the vest date to pay the withholding, and delivers the rest to your account. It is the default at most large employers. The shares sold to cover are a taxable sale, but they are sold at essentially the vest-date price, so the gain is close to zero. What it does not do is fix under-withholding: it funds the same flat 22%, not your real bracket.
Are RSUs taxed as income or capital gains?
Both, in sequence. The vest is ordinary income, reported as wages. Everything after the vest is capital gains. That split is why the vest-date price matters so much: it is simultaneously the last dollar of wage income and the first dollar of your cost basis. Get it right and the two taxes meet exactly once. Get it wrong and the same money is taxed twice.
How accurate is this calculator?
It applies the 2026 federal ordinary brackets and long-term capital gains breakpoints, the 2026 payroll constants from Publication 15, the statutory 3.8% NIIT thresholds and the flat 22% supplemental withholding rule, and it stacks the vest on top of your other income the way the tax code actually does. It deliberately does not model state tax, the alternative minimum tax, ISOs, a section 83(b) election, or an employer that uses the aggregate withholding method instead of the flat rate. Treat the output as a planning estimate. It is educational information, not tax advice.
Decide what the shares should become before the next vest
Build the allocation you actually want as a weighted index, backtest it against the position you are holding now, and let the rebalancing rules tell you what to sell each time stock lands in your account.
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