Equity Comp - RSU Taxes
RSU Tax Calculator
RSUs vesting? See exactly what you owe: income tax at vesting, the 22% withholding trap that surprises tech employees every April, and capital gains if you sell. Free, no sign-up.
1. Nominal APY vs. Real Post-Inflation Yield
A common pitfall in yield farming and staking is prioritizing high nominal APY percentages without factoring in baseline network token inflation. For instance, if a network offers 14% nominal staking rewards but dilutes circulating supply by 10% annually, your real purchasing power expansion is only ~3.6%.
2. Liquid Staking Derivatives (LSTs) & Capital Efficiency
Liquid staking protocols (such as Lido stETH, Rocket Pool rETH, and JitoSOL) allow institutional participants to maintain yield generation while retaining liquidity for DeFi lending and liquidity provision. However, LSTs introduce smart contract and depeg risk that must be modeled into portfolio variance.
How RSU Taxes Actually Work
Restricted Stock Units feel like free shares until vesting day, when the IRS treats the full vest-date value as ordinary W-2 income. Two tax events, two different rules:
1. At vesting: income tax + FICA
1,000 shares vesting at $50 = $50,000 of taxable income, even if you never sell. You owe federal income tax at your marginal rate, state tax, and 7.65% FICA (Social Security + Medicare). At 24% federal + 8% state, that is $19,825 of tax on shares you may not have sold.
2. The 22% withholding trap
Employers usually withhold federal tax on RSUs at a flat 22%. But RSU income stacks on top of your salary, so it is taxed at your marginal rate — 32%, 35%, or 37% for many tech workers. The gap between 22% withheld and what you actually owe arrives as a surprise tax bill in April. The calculator above shows your exact shortfall.
3. At sale: capital gains
Your cost basis is the vest-date price. Sell higher and the profit is a capital gain (short-term if held under a year, long-term after). Sell the day they vest and there is roughly zero gain — a common strategy to avoid concentration risk.
Smart moves
- Budget for the shortfall: set aside the difference between 22% and your marginal rate at every vest.
- Sell to cover: most brokers let you sell enough shares at vest to pay the tax — no out-of-pocket cash needed.
- Watch concentration: salary + unvested RSUs + vested shares can mean 80%+ of your wealth rides one stock. Diversify deliberately.
Comparing offers with equity? Use our job offer comparison calculator to weigh RSU grants against salary.
RSU Tax: Frequently Asked Questions
How are RSUs taxed?
At vesting, the fair market value is taxed as ordinary income (federal + state + 7.65% FICA). When you later sell, any gain above the vest price is taxed as capital gains.
Why is RSU withholding only 22%?
The IRS allows flat 22% supplemental-wage withholding, but your actual tax is your marginal rate on total income. High earners routinely owe the difference at filing time.
Do I pay tax on RSUs if I do not sell?
Yes. The vesting itself is the taxable event — you owe income tax on the vest-date value whether you sell or hold.
What is my cost basis for RSU shares?
The fair market value on the vesting date. Only appreciation after vesting counts as capital gain.
Should I sell RSUs immediately at vest?
Many advisors say yes: it locks in the value, eliminates single-stock concentration, and usually creates near-zero capital gains. It is a personal decision, not tax advice.