Why is 22% withheld for federal when I am in a 32% bracket?

The IRS mandates a flat 22% withholding rate for supplemental wages under $1M. You may owe more when you file your tax return if your effective bracket is higher.

What is 'Sell to Cover'?

It is a method where your employer sells enough shares from your vest to pay the withholding taxes, and deposits the remaining shares into your account.

RSU Tax Withholding Calculator

Estimate your net value and share count after taxes for your upcoming 2026 RSU vest.

Calculate Your Results

Adjust the values to see how your numbers change

What is RSU Tax Withholding?

When Restricted Stock Units (RSUs) vest, they are considered supplemental income by the IRS and are taxed at ordinary income rates in the year they vest. Your employer is required to withhold taxes at the time of vesting, similar to a bonus.

Most companies use a "Sell to Cover" method, where they automatically sell a portion of the vesting shares to cover the required tax withholding. This calculator helps you estimate how many shares will be sold and what your final net value will be.

How to Use This Calculator

Enter Number of Shares - Input the total count of RSUs that are scheduled to vest.
Input FMV Price - Enter the Fair Market Value (current stock price) at the time of vest.
Provide Annual Salary - This helps calculate if you've hit the Social Security wage limit ($184,500 for 2026) and if Additional Medicare Tax applies.
Select your State - Choose your state to apply supplemental wage withholding rates for state income tax.

Calculation Formula & Example

The Formula

Net Value = (Shares × FMV) - (Fed Withholding + FICA + State Withholding)

Where:

Fed Withholding = Standard supplemental rate of 22% (for values ≤ $1M)
FICA = 6.2% Social Security + 1.45% Medicare (+ 0.9% Additional Medicare if applicable)
State Withholding = State-specific supplemental rate (e.g., 10.23% in CA)

Example Calculation

Example: 100 shares vest at $150 each ($15,000 gross). Salary of $120k in CA.

Gross Value: $15,000
Federal Tax (22%): $3,300
FICA (7.65%): $1,147.50
State Tax (CA 10.23%): $1,534.50
Total Withheld: $5,982.00
Net Value: $9,018.00 (approx. 60.12 shares)

Benefits of Using This Calculator

Accurate Tax Prep - Avoid being surprised by a large tax bill or smaller-than-expected payout.
Cash Flow Planning - Know exactly how much cash value you are receiving to plan your investments.
Sell to Cover Estimates - Estimate exactly how many shares your brokerage will sell upon settlement.

Calculator Use Cases

Quarterly Vesting

Use every quarter to track your total compensation and tax drag.

Budgeting

Planning a large purchase using RSU proceeds? Use this to see the real 'after-tax' amount.

Frequently Asked Questions

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