RSU Tax Calculator
Restricted stock units (RSUs) granted by your employer are not taxed when they are granted, only when they vest. At vesting, the fair market value of the shares on that date is treated as ordinary compensation income, reported on your Form W-2, and subject to all payroll withholding: federal income tax at the supplemental wage rate (22% flat for most employees; 37% when cumulative supplemental wages in the year exceed $1,000,000), Social Security at 6.2% up to the annual wage base, Medicare at 1.45% with no cap, and state income tax at the applicable rate. Your employer is required to withhold these amounts at vesting, either by withholding a portion of the vested shares or by requiring a separate cash payment. After vesting, the fair market value on the vesting date becomes your cost basis in the shares. Any appreciation or depreciation after vesting is a capital gain or loss when you sell, taxed at short-term rates if held less than one year or long-term rates if held longer. This calculator takes the number of shares vesting, the market price on the vesting date, your year-to-date wages (to determine whether the Social Security wage base has been reached), and your state tax rate, then breaks out every component of withholding and shows your net RSU value after taxes and your new cost basis for future sale purposes.
500 shares vesting at $85 per share yields an RSU value of --, with -- in estimated taxes withheld, leaving -- net proceeds.
How RSU taxation at vesting is calculated
When RSUs vest, the fair market value (FMV) on the vesting date is ordinary income subject to federal, FICA, and state withholding. Federal withholding uses a flat supplemental rate of 22% for RSUs under $1 million total W-2 wages plus RSU value. FICA includes Social Security (6.2%) on wages up to the annual wage base ($176,100 in 2025) and Medicare (1.45%) on all wages. If total W-2 plus RSU exceeds $200k (single) or $250k (MFJ), Additional Medicare Tax (0.9%) applies.
RSU value at vesting = shares x FMV
Federal withholding = RSU value x 0.22
SS withheld = min(RSU value, remaining wage base) x 0.062
Medicare = RSU value x 0.0145
Additional Medicare = max(0, (YTD + RSU - threshold)) x 0.009
State withholding = RSU value x state rate
Total taxes = federal + SS + Medicare + add'l Medicare + state
Net proceeds = RSU value - total taxes
Cost basis = RSU value at vesting
Worked example
500 shares at $85 FMV, YTD wages $120,000, federal 22%, state 9.3%, single filer:
- RSU value = 500 x $85 = $42,500
- Total W-2 + RSU = $120,000 + $42,500 = $162,500 (below $200k threshold)
- Federal withholding = $42,500 x 0.22 = $9,350
- SS wage base remaining = $176,100 - $120,000 = $56,100 (applies to full RSU)
- SS withholding = min($42,500, $56,100) x 0.062 = $2,635
- Medicare withholding = $42,500 x 0.0145 = $616
- Additional Medicare = $0 (total under threshold)
- State withholding = $42,500 x 0.093 = $3,953
- Total withholding = $9,350 + $2,635 + $616 + $3,953 = $16,554
- Net proceeds = $42,500 - $16,554 = $25,946
- Cost basis for future sale = $42,500
Understanding cost basis and future taxation
Your cost basis in RSU shares is the fair market value on the vesting date. When you later sell the shares, your capital gain or loss is calculated as the sale price minus this cost basis. If you sell within 1 year of vesting, the gain is a short-term capital gain taxed as ordinary income. If you sell more than 1 year after vesting, it is a long-term capital gain taxed at preferential rates (0%, 15%, or 20%).
Keep detailed records of all RSU vesting dates, share counts, and fair market values on those dates. Your broker and employer will also provide statements showing cost basis. Do not rely on employer documentation alone; maintain your own records for accurate tax reporting. If shares decline in value between vesting and sale, the loss is a short-term or long-term capital loss depending on the holding period.
Review your tax withholding after RSUs vest. The flat 22% supplemental rate may be higher or lower than your actual top tax bracket. If withholding is insufficient, you may owe additional tax at tax time and should make estimated payments. If withholding exceeds your liability, you will receive a refund or credit against other tax obligations.
RSU taxation: frequently asked questions
What are RSUs and how are they taxed?
Restricted Stock Units (RSUs) are a form of equity compensation where your employer grants you units that vest (convert to shares) over time. At vesting, you owe ordinary income tax on the fair market value (FMV) of the shares on the vesting date. IRC Section 83 and IRS Publication 525 govern RSU taxation. The FMV at vesting becomes your cost basis for future capital gains or losses.
What is the difference between vesting and sale?
Vesting is when the RSU converts to actual shares, and you owe ordinary income tax on the FMV at that moment. Sale is when you later sell those shares. The gain or loss on sale (sale price minus cost basis) is a capital gain or loss. If you sell more than 1 year after vesting, it is a long-term capital gain taxed at preferential rates (0%, 15%, or 20%).
How much will my employer withhold when my RSUs vest?
Your employer typically withholds at a flat supplemental wage rate of 22% federal (for RSU values under $1 million), plus 7.65% FICA (Social Security 6.2% up to wage base, Medicare 1.45%), plus state income tax. If your total W-2 wages plus RSU value exceed $1 million, the federal rate increases to 37% on the excess. The total withholding is deducted from the net proceeds you receive.
What about Additional Medicare Tax and Social Security wage base limits?
If your year-to-date W-2 wages already exceed the Social Security wage base ($176,100 in 2025), no additional Social Security tax applies to the RSU. However, if RSU value plus W-2 wages exceed $200,000 (single) or $250,000 (MFJ), you owe Additional Medicare Tax of 0.9%. This tax is withheld by your employer and reported on Form W-2.
Will the withholding cover my actual tax liability?
Not necessarily. Supplemental withholding is a flat rate that may be more or less than your actual tax liability. For example, if your tax brackets are lower than the withholding rate, you will owe less tax and may receive a refund. Conversely, if your top bracket exceeds the withholding rate, you may owe additional tax. Review your tax situation and make estimated payments if needed.
What is my cost basis in RSU shares?
Your cost basis is the fair market value of the shares on the vesting date. For example, if your RSU vests when the stock price is $85 per share, and you receive 500 shares, your cost basis is $42,500 (500 x $85). When you later sell, the capital gain or loss is calculated as sale proceeds minus this cost basis. Keep detailed records of all vesting dates and FMV to calculate gains accurately.
Official sources
- RSU taxation overview: IRS Publication 525.
- Statutory authority: IRC Section 83 and IRS Topic 427.
- Wage basis and withholding: IRS Publication 15.
- 2025 wage base limits: IRS Rev Proc 2024-40.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information, not tax advice.