Calculate how much tax you'll owe when your Restricted Stock Units (RSUs) vest. Estimate federal, FICA, and state taxes on your RSU income, and see how many shares you keep after a sell-to-cover transaction.
| Tax Component | Rate | Amount |
|---|---|---|
| Federal Income Tax | 32.00% | $0.00 |
| Social Security (6.2%) | 6.20% | $0.00 |
| Medicare (1.45%) | 1.45% | $0.00 |
| Additional Medicare (0.9%) | 0.90% | $0.00 |
| State Income Tax | 0.00% | $0.00 |
| Total Tax | 0.00% | $0.00 |
| Net Value After Tax | — | $0.00 |
Situation: 100 shares vest at $50 FMV. You're in the 22% federal bracket, earn $75K/year, and live in a state with no income tax.
FICA: 7.65% (no Additional Medicare since income is below $200K).
Calculation: Total value = 100 × $50 = $5,000. Tax = $5,000 × (0.22 + 0.0765 + 0) = $5,000 × 0.2965 = $1,482.50.
Net shares: 100 − ($1,482.50 ÷ $50) = 100 − 29.65 = 70.35 shares.
Situation: 500 shares vest at $200 FMV. You're in the 32% federal bracket, earn $350K/year, and live in an 8% state tax state.
FICA: 7.65% + 0.9% Additional Medicare (income above $200K single threshold).
Calculation: Total value = 500 × $200 = $100,000. Tax = $100,000 × (0.32 + 0.0765 + 0.009 + 0.08) = $100,000 × 0.4855 = $48,550.
Net shares: 500 − ($48,550 ÷ $200) = 500 − 242.75 = 257.25 shares.
Situation: 250 shares vest at $75 FMV. You're in the 24% federal bracket, earn $150K/year, and live in a 5% state tax state.
FICA: 7.65% (no Additional Medicare since income is below $200K).
Calculation: Total value = 250 × $75 = $18,750. Tax = $18,750 × (0.24 + 0.0765 + 0 + 0.05) = $18,750 × 0.3665 = $6,871.88.
Net shares: 250 − ($6,871.88 ÷ $75) = 250 − 91.63 = 158.37 shares.
Shares = number of RSUs vesting
FMV = fair market value per share on vesting date
Federal Rate = your marginal federal income tax bracket (22%, 24%, 32%, 35%, or 37%)
FICA Rate = 7.65% (Social Security 6.2% + Medicare 1.45%)
Additional Medicare = 0.9% if annual income exceeds $200,000 (single), $250,000 (MFJ), or $125,000 (MFS)
State Rate = your marginal state income tax rate (0% in no-income-tax states)
Most employers use a "sell-to-cover" strategy: they sell enough vested shares to cover the tax withholding and deliver the remaining shares to you.
Example: $1,482.50 tax ÷ $50.00 FMV = 29.65 shares sold. Net = 100 − 29.65 = 70.35 shares.
| Tax Component | Rate | Notes |
|---|---|---|
| Federal Income Tax | 22%–37% | Based on your marginal tax bracket including RSU income |
| Social Security | 6.20% | Cap applies ($168,600 in 2024); only on wages up to the cap |
| Medicare | 1.45% | No income cap; applies to all wages |
| Additional Medicare | 0.90% | Applies above $200K (single), $250K (MFJ), $125K (MFS) |
| State Income Tax | 0%–13.3% | Varies by state; 9 states have no income tax |
Most employers withhold 22% federal on RSUs up to $1M (37% above $1M). This may not cover your actual tax liability if you're in a higher bracket — plan accordingly.
You can either pay the tax in cash and keep all shares, or let your employer sell shares to cover the tax. Sell-to-cover is the default for most companies.
Once RSUs vest and you own the shares, any future appreciation is taxed as capital gains (short-term or long-term) when you sell — not as ordinary income.
RSUs are not subject to AMT at vesting (unlike ISOs). However, the ordinary income from RSUs can push you into AMT range for other items.
When your Restricted Stock Units (RSUs) vest, the IRS treats the fair market value of the shares as ordinary income — just like a cash bonus. Your employer is required to withhold taxes at vesting, typically through a "sell-to-cover" arrangement where some shares are sold to cover the withholding.
The total tax rate on your RSU income includes four components: federal income tax (based on your marginal bracket), Social Security (6.2% up to the wage cap), Medicare (1.45% with no cap), and Additional Medicare (0.9% above $200K/$250K thresholds), plus any applicable state income tax.
The full FMV of vested shares is reported as W-2 ordinary income. If 100 shares vest at $50 each, you report $5,000 in additional income — regardless of whether you sell the shares or not.
Most employers withhold a flat 22% federal rate (37% above $1M) plus 7.65% FICA and applicable state tax. Check your actual withholding — being under-withheld means a bigger tax bill in April.
Social Security (6.2%) only applies to the first $168,600 of wages in 2024. If your other wages already exceed this cap, the RSU income may escape Social Security tax entirely.
Once you hold the shares, any price appreciation is a capital gain — short-term (held ≤1 year) or long-term (held >1 year). Long-term capital gains are taxed at 0%, 15%, or 20% depending on your income.
Most companies use a "sell-to-cover" (or "net settlement") method for RSU withholding. Here's how it works: at vesting, your employer calculates the total tax owed on the vested shares, immediately sells enough shares on the open market to cover that tax, and delivers the remaining shares to your brokerage account. The shares sold are typically sold at the same FMV used for the valuation, so the calculation is straightforward.
You can also choose to pay the taxes in cash (if your employer allows it) and keep all of the vested shares. This lets you retain full ownership, but requires you to have the cash available at vesting time. Some companies offer a "sell-all" option where all shares are sold and you receive the net cash proceeds.
Example: If you owe $1,482.50 in taxes and the FMV is $50.00/share:
Shares sold = $1,482.50 ÷ $50.00 = 29.65 shares. You keep 100 − 29.65 = 70.35 shares.
⚠️ Disclaimer: This RSU Tax Calculator provides estimates for educational purposes only and does not constitute financial, legal, or tax advice. Tax rates, brackets, and thresholds change annually and vary by jurisdiction. The calculator assumes the RSU income is added to your existing annual income for determining Additional Medicare Tax thresholds. Social Security tax is included at 6.2% regardless of wage cap — your actual liability may be lower if you've already exceeded the cap through other wages. State tax rates vary widely. Consult a qualified tax professional for advice specific to your situation. Figures are estimates, not guarantees.