RSU / Stock Option Tax Calculator

When RSUs vest, the IRS treats the fair market value of the shares on the vest date as ordinary income, taxed at your marginal federal and state rate. This is different from capital gains, which apply only when you later sell.

The IRS supplemental wage withholding rate is 22 percent up to one million dollars. If your total income pushes you into the 24, 32, 35, or 37 percent bracket, the difference is owed when you file your return.

FICA is the combined Social Security (6.2 percent) and Medicare (1.45 percent) employee tax, totaling 7.65 percent. RSU vesting income is subject to FICA up to the Social Security wage base.

For non-qualified stock options (NSOs), taxable income is the difference between market price and exercise price (the spread), not the full value. Enter your per-share cost basis to model this. For ISOs, the AMT calculation is separate and not modeled here.

RSUs (Restricted Stock Units) are company shares granted to you as compensation that vest on a schedule. When they vest, the market value of the shares you receive is taxed as ordinary income, just as if it were part of your salary. This happens on the vest date, not when you eventually sell the shares.

The grant date is when the company approves your RSU or option plan. The vest date is when you actually receive the shares, typically in installments over 3-4 years. Income tax is calculated and owed on the vest date, using that day's market price.

Once the shares vest and you pay ordinary income tax, your cost basis for future capital gains is the market price on the vest date. If you sell immediately, there is generally no significant additional tax. If you hold them for more than a year before selling, any additional gain is taxed at the long-term capital gains rate, which is more favorable than the ordinary rate.