Vesting is a paycheck
A restricted stock unit is a promise of shares. Nothing is taxed at grant; when the units vest and the shares are delivered, their fair market value that day is ordinary wage income, reported in box 1 of your W-2 and subject to income tax withholding, Social Security and Medicare exactly as a cash bonus would be (Publication 525, restricted property). There is no section 83(b) election for RSUs, because there is no property to elect on until vesting.
The 22% problem
Employers withhold on supplemental wages at a flat 22%, rising to a mandatory 37% only on the part of a year's supplemental wages above $1 million. For anyone whose RSU income lands in the 24%, 32% or 35% bracket, the flat rate under-withholds, and the difference is due with the return, sometimes with an underpayment penalty on top. A $15,000 vesting on a $120,000 salary is taxed at 22% and 24% for a single filer in 2026, about $3,560, while $3,300 was withheld; a $150,000 vesting on the same salary is mostly taxed at 24% and 32%: about $40,130 of tax against $33,000 withheld, a gap of about $7,130. The calculator runs the brackets on your salary plus the vesting and shows the shortfall so it is not a surprise.
Sell-to-cover
Most plans sell enough shares at vesting to cover the withholding (federal, Social Security, Medicare and state) and deliver the rest. On 100 shares at $150 with the taxes above, about 30 shares go to withholding and 70 arrive in the brokerage account. The calculator rounds the shares up the way plans do and shows any cash left over. Social Security stops at the wage base ($184,500 in 2026), so a high earner's later vestings in the year escape the 6.2%; Medicare never stops and adds 0.9% above $200,000.
Selling later: basis is the vest price
The vest-date value has already been taxed as wages, so it is your cost basis. Sell at $180 and only the $30 above the $150 vest price is a capital gain: short-term at ordinary rates if sold within a year of vesting, long-term at 0%, 15% or 20% after a year, plus the 3.8% net investment income tax above $200,000 ($250,000 joint). A share sold at vesting has no gain at all. The common error is a broker's Form 1099-B showing a $0 basis for RSU shares; filed as-is, the whole sale price is taxed again. Adjust the basis on Form 8949.
What the tool does not cover
Double-trigger RSUs at private companies (taxed at the liquidity event, not the time-vest), the alternative minimum tax (RSUs do not trigger it; incentive stock options do), state sourcing when you moved between states while the units vested, and whether to hold or sell the shares you keep: a concentration question, not a tax one.
Official sources used on this page
- Publication 525 (2025), Taxable and Nontaxable Income: Restricted Property (income at vesting, basis, withholding): 2025
- Publication 15 (2026), Employer's Tax Guide, section 7: supplemental wages: 22%, 37% above $1 million: 2026
- Rev. Proc. 2025-32 (2026 brackets, standard deduction and capital-gains thresholds): 2025-10-09
Every rule record names its source, revision and the date it was last verified; the results panel prints the ones your calculation used. Rules last verified 2 September 2026.