Your RSUs vested. You check the brokerage account, and the share count is smaller than the number on your grant letter. You didn’t get shortchanged. You got withheld.
Why are RSUs taxed so high?
When RSUs vest, the value of the shares becomes your paycheck for the day. The IRS taxes it like one: federal withholding, state withholding, local tax where it applies, Social Security, Medicare, and the Additional Medicare Tax above certain income levels. RSUs generally owe nothing at grant. The tax bill starts at vesting, and that value lands on your Form W-2.
Are RSUs taxed more than salary?
Once RSUs vest, the IRS treats them like salary or a bonus: ordinary income, taxed at your marginal rate. Your bracket depends on your total income for the year. It doesn’t care whether the money came from a paycheck or a stock grant.
The difference shows up in withholding, not the tax itself. Payroll withholds your salary using your W-4. RSUs get withheld differently. Employers can use a flat supplemental-wage rate instead: 22% up to $1 million in cumulative supplemental wages for the year, 37% mandatory above that.
That flat rate doesn’t know your bracket. Plenty of senior tech employees land in the 32% or 35% federal bracket once salary, bonus, and vested RSUs stack up, well past the 22% default. Vest $100,000 in a year where your marginal rate is 35%, and your employer withholds $22,000. Your bill runs closer to $35,000. That $13,000 gap doesn’t disappear. It shows up on your return, and if it’s large enough or late enough in the year, an underpayment penalty can ride along with it. To see the gap on a specific vest, run the numbers with Nino’s RSU tax calculator.
State tax adds another wrinkle. Some states apply their own flat supplemental rate to RSU income. Others tax it at your regular state rate, or skip supplemental treatment altogether. Change states mid-vesting, or work for a company that withholds for the state where it’s headquartered instead of where you live, and the gap grows.
There’s always a gap between what gets withheld and what you owe. The question is whether anyone’s tracking it.
RSU withholding versus what you owe
This is the one idea in this article worth remembering.
What RSU withholding means
Withholding is a down payment toward what you’ll owe when you file. When RSUs vest, your employer withholds cash or shares and sends the money to the IRS and your state, the same as it would for a paycheck.
What your final tax liability means
Your return adds RSU income to everything else in your year: salary, bonuses, a spouse’s income, other vesting, stock options, business income, interest, dividends, capital gains, deductions, credits. That total sets your final bill, not any single paycheck’s withholding.
Why high earners fall behind
Your marginal rate often sits above the 22% supplemental rate, sometimes well above it once the whole year adds up. Employers apply that flat rate (or 37% past $1 million in cumulative supplemental wages) regardless of your bracket. Every vesting event without a fix widens the gap.
Withholding is a deposit. Your return settles the account. What happens in between is where planning either closes the gap or lets it grow. Some employees raise their W-4 withholding on salary. Others send quarterly estimated payments timed to vesting dates. The right move depends on your income, your state, and how many vesting events are left this year, which is exactly why one person needs to see the whole year, not four people each seeing one piece of it.
When are RSUs taxed?
An RSU grant moves through three moments, and each one gets taxed on its own terms.
At grant
Nothing happens at grant. You don’t own the shares yet, and you may still need to hit a vesting date or a performance target first. The tax code excuses RSUs from tax at grant when they meet, or are exempt from, the deferred-compensation rules.
At vesting and settlement
Vesting is the trigger. The fair market value of the delivered shares becomes compensation income. 1,000 shares vest at $100 apiece, and you recognize $100,000 of income before withholding touches it. That number also becomes your cost basis going forward.
When the shares are sold
Sell later, and any move in price since vesting is a capital gain or loss, a separate event from vesting itself. For a full breakdown of how that compares to stock options, see Nino’s guide to RSUs vs. stock options. For now, the vesting-date price is your cost basis, and everything after that point plays by capital-gains rules.
The vesting date is the moment that counts most for taxes. Quarterly vests are planning windows. Most employees treat them as payroll days and move on.
How Nino helps with RSU tax and financial planning
Your employer sees payroll. Your CPA sees the return, months later. Your advisor, if you have one, sees the portfolio, not the paycheck. Tax software sees whatever you type in, whenever you get to it.
That leaves one person holding the whole picture: you. The salary, the vesting schedule, the bonus, a spouse’s income, every moving piece. Most people don’t track it as the year unfolds, because nothing in their setup was built to make that easy.
Nino closes that gap. A coordinated CFP and CPA work from one picture of your finances all year, watching how your vesting schedule collides with everything else before it turns into an April surprise. For sell-to-cover and the flat supplemental rate, see RSU tax withholding. Estimate the gap with the RSU tax calculator. For planning on one flat fee, see the RSU tax advisor page. If a large unlock is ahead, see post-liquidity planning.
Book a demo about getting ahead of your next vesting event. Through August 31, 2026, new members who start a one-year membership get $500 off their first year. Every plan includes a 30-day money-back guarantee.
