RSU Vesting Calculator
Estimate the net value of your vesting RSUs after taxes.
How are RSUs taxed when they vest?
Restricted Stock Units (RSUs) are taxed as ordinary income at the moment they vest, based on the fair market value of the shares on that date — not on some future sale price. That means the full value of your vesting shares (number of shares times the current stock price) is added to your taxable income for the year, and it's taxed at your marginal tax rate just like a cash bonus would be, regardless of whether you sell the shares immediately or hold onto them.
Why do some shares get withheld at vesting?
Because RSU income is taxable immediately, many employers automatically withhold a portion of the vesting shares — rather than cash — to cover the estimated tax liability, a practice sometimes called "sell to cover." This calculator illustrates that approach by approximating the number of shares withheld as the vesting share count multiplied by your tax rate, leaving you with the net shares you actually keep. In practice, exact withholding mechanics and rates depend on your employer's specific plan and your actual tax bracket calculated across your full income.
What should you do with RSU shares after they vest?
Once RSUs vest and the tax is paid, the shares are yours to keep or sell, and any further gain or loss from that point forward is treated as a capital gain or loss (short-term or long-term depending on how long you continue to hold them) rather than ordinary income. Many financial advisors recommend selling at least a portion of newly-vested RSUs to avoid excessive concentration in a single company's stock, especially your own employer's — but the right approach depends on your full financial picture, risk tolerance, and tax situation, so consider speaking with a financial advisor.
Frequently Asked Questions
Are RSUs taxed when they vest or when I sell them?
RSUs are taxed as ordinary income at vesting, based on the stock's fair market value on that date. Any additional gain or loss after vesting, if you hold the shares before selling, is taxed separately as a capital gain or loss.
What tax rate applies to RSU income?
RSU income is taxed as ordinary income at your marginal tax rate, the same as wages or a cash bonus, plus applicable payroll taxes. It's often withheld initially at a flat supplemental wage rate, which may differ from your actual final tax rate.
Why are some of my RSU shares automatically sold at vesting?
Many employers use a "sell to cover" approach, automatically selling a portion of your vesting shares to generate cash for the required tax withholding, so you receive the remaining net shares rather than the full grant.
Should I sell my RSUs immediately after they vest?
Many financial advisors suggest selling at least some vested RSUs to avoid over-concentration in a single stock, especially your employer's, but the right decision depends on your overall portfolio, risk tolerance, and beliefs about the company's future.
How is the value of vesting RSUs determined?
The taxable value is the number of shares vesting multiplied by the stock's fair market value (typically the closing price) on the vesting date, regardless of the price at which the shares were originally granted.
Do I owe taxes on RSUs even if I don't sell them?
Yes. Tax is due on the value of the shares at vesting regardless of whether you sell them, which is why many plans withhold shares or require you to cover the tax bill in cash even if you plan to hold the stock.
What's the difference between RSUs and stock options?
RSUs are outright grants of stock that have value as soon as they vest, while stock options give you the right to buy shares at a fixed strike price and only have value if the stock price rises above that strike price.
How accurate is this RSU calculator?
It provides a simplified estimate using the tax rate and share withholding percentage you enter. Actual withholding rates, payroll taxes, and your final tax liability depend on your employer's specific plan and your full tax situation — consult a tax professional for precise figures.