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Calculators / Income & taxes

RSU withholding shortfall

Vested RSUs are taxed like salary, but employers withhold a flat 22% - while your actual marginal rate on that income may be 32-37%. The gap becomes an April surprise. Estimate yours now. Nothing you type leaves this page.

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Shares x price at each vest. It is W-2 income the moment it vests - whether or not you sell.

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States under-withhold on RSUs too - the tax tool shows yours.

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Estimated shortfall at filing

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Tax on the RSUs (fed+state)

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Withheld (fed+state)

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Real marginal rate on RSUs

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Set aside per $10k vest

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Your RSU dollars: withheld vs. actually owed

The arithmetic

Why the shortfall exists

The IRS classifies RSU vests as "supplemental wages," withheld at a flat 22% (37% only on supplemental income past $1M). But the vest stacks on top of your salary - so its real marginal rate is whatever bracket your salary already reached: 24%, 32%, 35%. The calculator computes the actual 2026-bracket tax on your stacked income and subtracts what the flat rate withholds - federal and state.

What to do about it

Three fixes, in order of ease: sell enough shares at each vest and park the set-aside figure above; file a new W-4 adding extra withholding per paycheck; or pay quarterly estimates. And know the safe harbor: pay in at least 110% of last year's total tax (100% if AGI under $150k) and you owe no penalty regardless of the shortfall - the balance is simply due in April.

ESPP, while you're here

ESPP discounts are also ordinary income and typically have zero withholding - the same trap, smaller dollars. Add your expected discount income to the RSU field for a combined estimate.

Notes

Uses 2026 federal brackets and the standard deduction; Additional Medicare (0.9% over $200k/$250k) included. Capital gains after the vest are a separate, second tax event - the vest itself is pure ordinary income.

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