Does this calculator handle NQSOs or ISOs?

This tool specializes in RSU taxation. We have separate calculators for NQSOs and ISOs that account for their unique tax treatment at exercise and sale.

RSU Tax Calculator

Estimate your tax liability on vested Restricted Stock Units (RSUs) with this easy-to-use calculator. Get a breakdown of federal, state, and other taxes that may apply when your RSUs vest.

RSU Tax Calculator FAQs

How are RSUs taxed when they vest?

When your RSUs vest, the fair market value of the shares at vesting is considered taxable income. This amount is subject to federal income tax, state income tax (if applicable), and FICA taxes (Social Security and Medicare).

What is “sell to cover”?

Most companies automatically sell a portion of your vested shares to cover the tax withholding. This is called “sell to cover.” The remaining shares are deposited into your account. Our calculator assumes this typical scenario unless you uncheck the option.

How accurate is this calculator?

This calculator provides estimates based on the rates you input. Actual tax liability may vary based on your specific tax situation, additional income, deductions, and other factors. Consult a tax professional for personalized advice.

RSU Tax Calculator: A Complete Guide to Estimating Your Taxes

Introduction

If you receive Restricted Stock Units (RSUs) as part of your compensation, you need to understand how they are taxed. RSUs can be a great benefit, but taxes can significantly reduce their value.

An RSU tax calculator helps you estimate how much tax you’ll owe when your RSUs vest. This guide explains how RSU taxation works and how to use an RSU tax calculator effectively.

What Are RSUs?

RSUs are company stocks given to employees as part of their compensation. Unlike stock options, RSUs have no upfront cost. You receive actual shares when they vest (become yours).

Key Features of RSUs:

You don’t own them until they vest.
They are taxed as income when they vest.
The value at vesting is added to your taxable income.

How Are RSUs Taxed?

When your RSUs vest, the fair market value (FMV) of the shares is considered taxable income. Taxes are withheld immediately, reducing your take-home shares.

Types of Taxes on RSUs

Federal Income Tax

Taxed as ordinary income (not capital gains).
Rate depends on your tax bracket (e.g., 22%, 32%, etc.).

State Income Tax (If Applicable)

Some states (like California and New York) tax RSUs.
Others (like Texas and Florida) have no state income tax.

FICA Taxes (Social Security & Medicare)

Usually 7.65% for employees.
High earners may pay an extra 0.9% Medicare tax.

Additional Medicare Tax (If Applicable)

Applies if your income exceeds $200,000 (single) or $250,000 (married).

Capital Gains Tax (When You Sell)

If you hold shares after vesting, future gains are taxed at capital gains rates (0%, 15%, or 20%).

How an RSU Tax Calculator Works

An RSU tax calculator estimates your tax liability when your RSUs vest. Here’s how it calculates:

Step 1: Enter Your RSU Details

Number of RSUs vesting (e.g., 100 shares).
Stock price at vesting (e.g., $50 per share).

Step 2: Enter Tax Rates

Federal tax rate (e.g., 22%).
State tax rate (e.g., 5%).
FICA tax rate (7.65%).

Step 3: Choose “Sell to Cover” Option

Most companies sell a portion of your shares to cover taxes. This is called “sell to cover.”

If enabled, the calculator estimates how many shares are sold for taxes.
If disabled, you must pay taxes separately.

Step 4: View Your Tax Breakdown

The calculator shows:
✅ Total vesting value (before taxes).
✅ Federal, state, and FICA taxes.
✅ Shares sold for taxes (if applicable).
✅ Net shares and value after taxes.

Example RSU Tax Calculation

Let’s say:

100 RSUs vest at $50 per share.
Federal tax rate = 22%.
State tax rate = 5%.
FICA tax rate = 7.65%.
Sell to cover = Yes.

Calculations:

Total Value = 100 shares × $50 = $5,000 (taxable income).
Federal Tax = $5,000 × 22% = $1,100.
State Tax = $5,000 × 5% = $250.
FICA Tax = $5,000 × 7.65% = $382.50.
Total Taxes = $1,100 + $250 + $382.50 = $1,732.50.
Shares Sold for Taxes = $1,732.50 ÷ $50 ≈ 35 shares.
Net Shares = 100 – 35 = 65 shares.
Net Value = 65 × $50 = $3,250.

Result: You receive 65 shares worth $3,250 after taxes.

Why Use an RSU Tax Calculator?

Avoid Surprise Tax Bills

Know how much tax will be withheld before vesting.

Plan Your Finances

Decide whether to sell shares immediately or hold them.

Compare Different Scenarios

Test different tax rates and stock prices.

Estimate Take-Home Value

See how much you’ll actually receive.

Common RSU Tax Mistakes to Avoid

❌ Not Accounting for State Taxes

Some employees forget their state tax rate, leading to unexpected bills.

❌ Ignoring AMT (Alternative Minimum Tax)

High earners may owe AMT, increasing their tax burden.

❌ Holding Shares Too Long

If the stock price drops, you still owe taxes on the vesting value.

❌ Not Adjusting Withholding

If your company doesn’t withhold enough, you may owe extra taxes.

FAQs About RSU Taxation

1. Are RSUs Taxed Twice?

No. They are taxed only once at vesting (as income).
If you sell later, only capital gains on growth are taxed.

2. Can I Reduce RSU Taxes?

Yes, by:
Moving to a no-tax state before vesting.
Timing vesting in a lower-income year.
Donating shares to charity.

3. What If My Company Doesn’t Sell Shares for Taxes?

You must pay taxes out of pocket or sell shares yourself.

4. Do RSUs Affect My Tax Bracket?

Yes, the vesting value is added to your income, possibly pushing you into a higher bracket.

Conclusion

An RSU tax calculator helps you estimate how much tax you’ll owe when your RSUs vest. By entering your RSU details and tax rates, you can:
✔ See your total tax liability.
✔ Know how many shares will be sold for taxes.
✔ Calculate your net take-home value.

Use this tool to avoid surprises and plan your finances wisely. If you have complex tax situations, consult a tax professional.

RSU Tax Calculator | Restricted Stock Unit Tax Estimator