Restricted Stock Units (RSUs) are a valuable form of compensation that can significantly increase your income and long-term wealth. But they also come with a tax responsibility that often catches employees by surprise. The easiest way to avoid unexpected bills is to estimate your liability in advance—something a simpleRSU vesting tax calculator can help you do in minutes.

How RSU Taxation Works

When RSUs vest, the fair market value of your shares is treated as taxable income. This means federal income tax, Social Security, Medicare, and state income taxes (if applicable) are all due immediately.

Employers will usually withhold shares to cover taxes, but most rely on the IRS default withholding rate of 22%. If your actual tax bracket is higher—say 32% or 35%—you’ll still owe additional taxes when filing.

The Risks of Ignoring Withholding Estimates

If you don’t take the time to run the numbers, you may face:

Under-withholding: Not enough taxes withheld, creating an IRS bill.

Over-withholding: Too many shares withheld, unnecessarily lowering your payout.

State tax surprises: Especially if you move or work remotely in multiple states.

How an RSU Vesting Tax Calculator Helps

With just a few inputs—like the number of RSUs vesting, the stock price on vesting date, your total annual income, your employer’s withholding rate, and your state of residence—you can project your true tax liability.

An RSU vesting tax calculator compares your estimated taxes against your employer’s withholding, helping you see if you’ll need to set aside extra money or if you’re safely covered.

Bottom Line

RSUs can be one of the most rewarding parts of your compensation package, but they require proactive tax planning. Don’t wait until tax season to discover a shortfall. By using an RSU vesting tax calculator, you can plan ahead, manage your budget effectively, and make the most of your equity compensation.