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Free RSU Tax Calculator
When your RSUs vest, employers withhold at the federal supplemental wage rate of 22% — but if your marginal bracket is 32% or 35%, that 10-13 point gap shows up as a big bill at tax time. This calculator quantifies that under-withholding gap, plus all the other components: Social Security (6.2% up to the wage base — $176,100 for 2025, $184,500 for 2026), Medicare (1.45% uncapped), Additional Medicare (0.9% above $200k single / $250k MFJ per IRC § 3101(b)(2)), and your state's supplemental rate.
Use 2026 for vests happening this year; switch to 2025 to match the SS wage base for last year's vests.
This vest
Tax rates
22% for cumulative supplemental wages ≤ $1M; 37% above. Per Treas. Reg. § 31.3402(g)-1.
The actual bracket the RSU income falls into. If higher than 22%, you have an under-withholding gap.
0% for no-income-tax states (FL, TX, NV, WA, TN, NH limited, SD, WY, AK).
YTD context (for SS / Additional Medicare)
2025 SS wage base is $176,100. Above this, no more SS tax is withheld.
Used to check the Additional Medicare 0.9% threshold ($200k single / $250k MFJ).
Net cash if sold at vest
$62,011
After all federal, state, FICA withholding on a $100,000 vest.
Under-withholding gap
+$10,000
You'll likely owe this much extra at tax filing. Plan to set it aside.
Net if sold at vest
$62,011
+$10,000 under-withholding gap at year-end.
Net cash
$62,011
Gap
+$10,000
📐 Open methodology, sources & limitations
Formula
On vest: FMV × shares = ordinary W-2 income (IRC §83(a)). Federal withheld = vestValue × supplementalRate (22% for cumulative supplemental wages ≤ $1M; 37% above) Federal actually owed = vestValue × yourMarginalRate Under-withholding gap = Federal owed − Federal withheld Social Security = min(vestValue, max(0, SS wage base − YTD SS wages)) × 6.2% Medicare = vestValue × 1.45% Additional Medicare = incremental wages above threshold × 0.9% State = vestValue × stateRate Net cash if sold at vest = vestValue − (federal + SS + Medicare + add'l Medicare + state)
Assumptions
- Social Security wage base of $176,100 (2025) or $184,500 (2026), per the selected year; SS rate 6.2%, Medicare rate 1.45%.
- Additional Medicare Tax 0.9% applies above $200,000 (single) / $250,000 (MFJ) — statutory thresholds, not inflation-indexed.
- Federal supplemental withholding defaults to the IRS flat 22% rate for supplemental wages up to $1M cumulative per calendar year (37% above).
- You supply your own true marginal federal rate and state rate; the tool does not derive them from income.
- Shares are assumed sold immediately at vest — no subsequent capital gain or loss is modeled.
Sources
- IRC §83(a) — Property transferred in connection with performance of services — §83(a)
- Treas. Reg. §31.3402(g)-1 — Supplemental wage withholding (22% / 37%) — §31.3402(g)-1
- IRC §3101 — FICA Social Security and Medicare tax rates — §3101
- IRC §3101(b)(2) — Additional Medicare Tax — §3101(b)(2)
- IRS Publication 15 (Circular E) — Employer’s Tax Guide
- SSA Fact Sheets — Social Security wage base: $176,100 (2025), $184,500 (2026)
This tool does NOT model:
- Section 83(b) elections (available only on restricted STOCK, not RSUs)
- Early-exercise or double-trigger RSUs at private companies
- State-specific supplemental withholding rates — a single state rate you enter is used
- Local or municipal income tax (NYC, Ohio municipalities, etc.)
- Foreign-employer or tax-treaty considerations
- Capital gain or loss if shares are held rather than sold at vest
Last reviewed: 2026-06-12 · Tax year modeled: 2025 & 2026 (selectable)
This methodology section exists so you can verify the math. We show our formulas because you deserve to know how a number was calculated. This is calculation transparency, not financial advice.
What changed for 2026
For RSU withholding, one number moved for 2026: the Social Security wage base rose from $176,100 to $184,500 (SSA 2026 fact sheet), so up to $8,400 more of wages-plus-vests is subject to the 6.2% Social Security tax before the cap is reached. The federal supplemental withholding rates are unchanged — still a flat 22%, and 37% on cumulative supplemental wages above $1M. The 0.9% Additional Medicare thresholds ($200,000 single / $250,000 MFJ) are set by statute and never inflation-adjust. The under-withholding gap itself can still shift year to year because the regular bracket thresholds moved up under Rev. Proc. 2025-32 — use the year toggle above to check both.
| Figure | 2025 | 2026 |
|---|---|---|
| Social Security wage base | $176,100 | $184,500 |
| Federal supplemental withholding rate | 22% / 37% | 22% / 37% |
| Additional Medicare threshold (single / MFJ) | $200,000 / $250,000 | $200,000 / $250,000 |
The RSU under-withholding trap
When your RSUs vest, the IRS treats the fair market value of the vested shares as ordinary W-2 income on the vest date (IRC § 83(a)). Your employer must withhold federal income tax — but they use the supplemental wage rate: a flat 22% (for cumulative supplemental wages up to $1M in a calendar year; 37% above that, per Treas. Reg. § 31.3402(g)-1). It is the same flat-rate rule that applies to cash bonuses, and it is unchanged between 2025 and 2026.
If your marginal federal bracket is 24%, 32%, or 35% (common for tech and finance employees with RSUs), the 22% supplemental withholding leaves a 2–15 percentage-point shortfall. That shortfall doesn't show up until you file your tax return — and on a $200,000 RSU year, it's easily $20,000–$30,000 owed at filing time. This calculator quantifies that gap so you can set aside the right amount now.
What gets withheld on every vest
- Federal income tax at the supplemental wage rate (22% or 37%).
- Social Security (6.2%) until your YTD SS wages hit the wage base — $176,100 in 2025, $184,500 in 2026. Above the base, no more SS tax.
- Medicare (1.45%) on every dollar — no cap.
- Additional Medicare (0.9%) on wages above $200k single / $250k MFJ (IRC § 3101(b)(2), set by statute — not inflation-adjusted).
- State income tax at the state-specified supplemental rate (CA: 10.23% on bonuses; NY: 11.7%; many no-tax states: 0%).
- Local income tax where applicable (NYC, OH municipalities, etc.).
Sell-to-cover vs sell-all
Most companies offer two settlement options at vest: sell-to-cover sells just enough shares to cover the withholding, leaving you with net shares; sell-all sells the entire vest at the vest price and gives you cash net of withholding. Sell-to-cover leaves you with concentrated company stock exposure; sell-all immediately diversifies. Financial planners generally recommend sell-all on each vest unless you have a specific concentrated-stock-position strategy or are at a company where stock is far cheaper than current public-market pricing.
RSUs are often only one slice of an equity package. If you also hold ISOs or NQSOs, the stock option tax calculator compares exercise-and-sale scenarios, and a large ISO exercise can trigger the alternative minimum tax — the AMT calculator finds how much you can exercise before it kicks in.
Tips to avoid the year-end surprise
- Increase your W-4 withholding. Submit a new W-4 to your employer requesting extra withholding from each paycheck to cover the RSU gap. This spreads the shortfall across the year rather than as a single April spike.
- Make estimated tax payments. Quarterly 1040-ES payments to the IRS cover the gap. Form deadlines: 4/15, 6/15, 9/15, 1/15. Underpayment penalty applies if you withhold less than 90% of current-year tax or 110% of prior-year tax (110% for high earners with AGI > $150k; 100% otherwise).
- Set aside the gap in a high-yield savings account. The calculator's "trueUp" estimate is what you should park in cash, earning 4–5% interest, until April 15.
- Watch for double-counting. Your W-2 will show RSU income at vest. Your 1099-B from the broker will show the same shares as a sale (if sell-to-cover or sell-all). Cost basis on the 1099-B is the vest-day FMV — make sure your tax software doesn't double-count by treating the vest income AND the share sale gain.
- Sell vested RSUs immediately unless you have a strong contrary view. Holding vested RSUs is the same as buying your company's stock with cash at the market price. If you wouldn't buy it with cash, sell.
Frequently Asked Questions
How are RSUs taxed at vest?+
The fair market value of the vested shares is treated as ordinary W-2 income on the vest date (IRC § 83(a)). It's subject to federal income tax (at the supplemental wage rate), Social Security (up to the wage base), Medicare, Additional Medicare (if YTD wages exceed the threshold), and state/local income tax. The shares become yours; if you sell at vest, the cost basis equals the vest-day FMV so there's typically no further gain/loss.
What is the supplemental wage rate?+
Per Treas. Reg. § 31.3402(g)-1, employers withhold federal income tax on supplemental wages (bonuses, RSUs, commissions) at a flat 22% — unless cumulative supplemental wages exceed $1,000,000 in the calendar year, in which case the excess is withheld at 37%. This is independent of your true marginal bracket — and is the source of the "RSU gap" for high earners.
Why do I always owe a lot at tax filing on RSU years?+
Because the 22% supplemental withholding is often below your marginal federal rate. If you're in the 32% bracket and have $200k of RSUs vest, the employer withholds $44k federal, but you actually owe $64k — a $20k year-end gap. Add state and Additional Medicare and the surprise can be $25-35k. The fix: request extra W-4 withholding, make quarterly estimated payments, or set aside the gap in cash.
Does Social Security stop at the wage base?+
Yes. The SS wage base is $176,100 for 2025 and $184,500 for 2026 (per SSA). Once your YTD SS wages exceed that amount, no more SS tax is withheld for the rest of the year. Medicare has no cap. If you have a big Q4 vest after already maxing out the SS base, your net cash is meaningfully higher than the same vest in Q1 of a new year.
What is Additional Medicare?+
A 0.9% surtax on wages exceeding $200k single / $250k MFJ / $125k MFS (IRC § 3101(b)(2)). The thresholds are set by statute — not inflation-adjusted — so over time they bite more people. Employers withhold at the individual $200k threshold (not the filing-status threshold) for everyone, then it's reconciled at filing.
Should I increase my W-4 withholding?+
For RSU-heavy compensation, yes. Submit a new Form W-4 to payroll specifying additional per-paycheck withholding (Step 4(c)) to cover the projected RSU gap. Smooths out the cash flow burden vs an April spike. Alternative: quarterly 1040-ES payments to the IRS. The safe-harbor rule (IRC § 6654) lets you avoid underpayment penalty if you withhold at least 90% of current-year tax or 110% of prior-year tax (110% for AGI > $150k).
Should I sell my RSUs at vest?+
In most cases, yes. Holding vested RSUs is mathematically the same as taking the vest cash and buying your company's stock at the open market price. Most employees already have significant exposure to their company (salary, benefits, options); concentrated stock positions are usually under-rewarded for the risk. Financial planners typically recommend "sell at vest and diversify" unless you have a strong contrary view on the stock or are at a company where shares are far below true value.
Is my data stored?+
No. Every calculation runs in your browser. Your vest value, marginal rate, and YTD wages never touch a server.
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