RSU Tax Calculator: How to Estimate, Plan, and Avoid Surprises
If you’ve received Restricted Stock Units (RSUs) as part of your compensation, congratulations—equity can be one of the most powerful ways to build wealth.
But it also comes with one big risk: tax surprises
How are RSUs Taxed?
RSUs are taxed as ordinary income when they vest. This means the fair market value of the shares on your vesting date is added to your W-2 income for the year. This is how it would play out:
Federal Tax Withholding on RSUs
The IRS treats RSUs as supplemental wages.
22% flat federal withholding on the first $1 million of supplemental income in a calendar year.
37% flat withholding on any amount above $1 million.
Payroll, State, and Local Taxes on RSUs
Social Security
6.2% on wages up to the annual limit ($176,100 in 2025)
Medicare
1.45% on all wages.
Additional Medicare Tax
0.9% on wages above $200,000 (single) or $250,000 (married filing jointly)
State and Local
Your state’s supplemental wage rules apply. In California, for example, the flat supplemental rate is currently 11.7%.
Why Under-Withholding on RSUs Is Such a Big Deal
When your RSUs vest, your company typically withholds just 22% for federal taxes.
But, since you can be taxed up to 44%, you’re almost guaranteed to owe more than what was withheld.
That difference doesn’t get paid automatically. You’ll owe it in cash, out-of-pocket—often months after your RSUs vest.
How Stock Price Increases Affect Your RSU Tax Bill
Your tax bill grows too. You’re taxed on the fair market value at vesting, not at grant or when you sell. So if your company stock jumps 50% before vesting…
And the IRS still wants their cut—in cash—even if you’re still holding the shares.
Get the Calculator Sent to Your Inbox
Enter your info below and we’ll send you everything you need to estimate your RSU tax exposure — and make smarter decisions going forward.
You Could Owe Thousands Without Selling a Single Share
The IRS treats your RSUs like income—but expects payment in cash, not stock. So unless you sell shares or plan ahead, you could owe:
How to Use the RSU Tax Calculator
In under 2 minutes, you can see your full RSU tax picture. Just plug in:
- Filing status and state of residence
- Salary, bonus, and 401(k)/HSA contributions
- Number of RSUs vesting and expected stock price
- Your company’s withholding rate (usually 22% or 37%)
5 Strategies to Avoid a Large RSU Tax Bill
- Adjust your W-4 to withhold more from regular paychecks.
- Make quarterly estimated tax payments to cover the gap.
- Sell to cover- sell enough shares at vesting to pay your tax bill.
- Diversify by selling some RSUs to reduce concentration risk.
- Charitable giving- donate appreciated shares to offset taxable income.
Frequently Asked Questions About RSU Taxes
- The first $1M is withheld at 22%.
- The excess is withheld at 37%.
- Your actual marginal rate may still require additional payments.
Coordinate with your salary and bonus schedule - large year-end bonuses can push more RSU income into the 37% withholding bracket.
DISCLOSURE: This RSU Tax Calculator is provided by Domain Advisors, LLC, an SEC-registered investment advisor, and is intended for informational and educational purposes only. It offers a simplified illustration of potential federal and state tax implications related to a single Restricted Stock Unit (RSU) grant based on user-provided inputs. This tool does not constitute and should not be relied upon as tax, legal, or investment advice. It does not account for all relevant tax factors, including (but not limited to) the Alternative Minimum Tax (AMT), Net Investment Income Tax (NIIT), additional Medicare taxes, state or local tax rules, other income sources, deductions, or credits. Calculations are based on generalized assumptions and may not reflect your actual tax liability. Domain Advisors does not guarantee the accuracy of this tool or its results. For personalized advice, please consult a qualified tax professional or financial advisor. Domain Money and Domain Advisors are wholly owned subsidiaries of Domain Money, Inc. Registration with the SEC does not imply a certain level of skill or training, nor does it constitute an endorsement by any regulatory authority. All investing involves risk, including the potential loss of principal. Past performance is not indicative of future results.