RSU Vest Tax Calculator

When RSUs vest, the fair-market value × number of shares is treated as ORDINARY INCOME - reported on your W-2 and subject to federal supplemental withholding (22% standard, 37% on bonuses + RSUs over $1M YTD), state withholding, FICA (6.2% up to wage base + 1.45% Medicare + 0.9% additional on $200K+). Companies typically "sell to cover" - auto-sell ~30-40% of vested shares to fund the tax bill, depositing the net to your brokerage.

The 22% supplemental withholding rate is a flat rate the IRS sets, NOT your actual marginal bracket. If you're in the 32% federal bracket, the company under-withholds by 10% of your RSU value. On $300K of RSUs vested, that's $30,000 owed at tax time. Add state tax (no withholding gap in many states but flat 22% can also under-withhold). High-RSU employees should plan for this with quarterly estimated tax payments or W-4 adjustments.

Default to sell. RSUs at vest are equivalent to receiving a cash bonus AND immediately investing it 100% in a single stock - concentrated single-stock risk most financial advisors counsel against. Selling immediately captures the value, diversifies, and any subsequent gain on held shares is just incremental investment decision - separate from the comp question. Counter-argument: long-term capital gains treatment if held 1+ year, but typically not worth the concentration risk.

The fair-market value on the vesting date - the same value taxed as ordinary income. Selling at vest = $0 gain (or tiny intraday move). Selling LATER at a different price creates capital gain/loss against this basis. Critical: brokerages sometimes report $0 basis on 1099-B, which would double-tax you. Always verify cost basis when filing - use vesting confirmation from your equity platform.