RSU Tax Calculator

By clarifying your tax obligations, you can make informed decisions about selling shares, withholding taxes, and integrating RSUs into your financial plan. The calculator considers federal, state, medicare and social security taxes to give you a comprehensive calculation.

Introduction

Our simple RSU tax calculator makes it easy to understand your potential tax liability. It's perfect for anyone looking to optimize their RSU strategy, regardless of experience level.

Don't let the 'complexities' of RSU taxes hinder you from fully utilizing your equity compensation. This page also covers general tips for how to manage RSUs + taxes.

If you are new to AdvisorFinder

Welcome! If it's your first time on AdvisorFinder, we want to say hello 👋 Our mission is to help people make more informed financial decisions. Once you're finished with this calculator, you might want to subscribe to our newsletter.

AdvisorFinder is a startup company with a unique perspective on equity compensation. All of our founding team members have received RSUs, so we understand the nuances firsthand. We noticed a significant gap when searching for reliable tools and information on how to calculate taxes for RSUs and other forms of equity compensation that are common with startups. Use this straightforward tool to plan your finances better and avoid any surprises.

RSU Tax Calculator

Understanding the tax implications of your Restricted Stock Units (RSUs) can be challenging. Our RSU Tax Calculator makes it easy to get an instant estimate of the taxes you might owe when you sell your RSUs. Results are displayed in a simple chart comparing taxable income to estimated taxes.

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*Note: this is an estimate from a simple online calculator and should not be considered tax advice. This content is not meant to take the place of a CPA, financial advisor, or other financial professional(s) you may need to consult in order to properly manage your RSUs. Please use your discretion when making major financial decisions such as this.

How do I use the RSU tax calculator?

  1. Enter the Number of RSUs:
    • Definition: This is the total number of Restricted Stock Units you own.
    • Input: Enter the total number of RSUs in the 'Number of RSUs' field.
    • Example: If you own 1,420 RSUs, input '1420'.
  2. Enter the Unit Value:
    • Definition: This is the current market value per unit of your RSUs.
    • Input: Provide the current market price per unit in the 'Unit Value' field.
    • Example: If each RSU is valued at $69.00, input '69.00'.
  3. Enter Your Federal Tax Rate:
    • Definition: This is the percentage of your income that is taxed by the federal government.
    • Input: Specify your federal tax rate as a percentage in the 'Federal Tax Rate' field.
    • Example: If your federal tax rate is 24%, input '24.00'.
  4. Enter Your State Tax Rate:
    • Definition: This is the percentage of your income that is taxed by your state government.
    • Input: Provide your state tax rate as a percentage in the 'State Tax Rate' field.
    • Example: If your state tax rate is 5%, input '5.00'.
  5. Enter Your Total Salary:
    • Definition: This is your total annual salary, which helps in calculating your overall tax bracket.
    • Input: Enter your total salary in the 'Total Salary' field.
    • Example: If your total salary is $100,000, input '100,000'.
  6. Select Your Filing Status:
    • Definition: This determines your tax bracket and filing requirements (e.g., Single, Married Filing Jointly).
    • Input: Choose your filing status from the dropdown menu.
    • Example: If you are single, select 'Single'.
  7. Enter Your Email Address:
    • Definition: This is optional, but providing your email address allows you to receive a copy of your results and wealth insights from AdvisorFinder.
    • Input: Enter your email address in the provided field.
    • Example: your-email@example.com.
  8. Calculate Your Taxes:
    • Action: Click on the 'Calculate' button to get your results.
    • Output: The calculator will display the estimated total taxes you owe based on the inputs provided.

Important Notes

Medicare Tax: There is no cap on the Medicare tax rate.

Social Security Cap: The Social Security tax rate is applied up to the wage base limit of $160,200 for 2024.

Example Calculation

For instance, if you have 1,000 RSUs with a unit value of $50, a federal tax rate of 22%, and a state tax rate of 5%, the calculator will provide an estimated tax liability. This includes federal taxes, state taxes, Social Security, and Medicare contributions.

Formula Breakdown

Taxable Income: Number of RSUs * Unit Value

Federal Taxes: Taxable Income * Federal Tax Rate

State Taxes: Taxable Income * State Tax Rate

Social Security Taxes: Taxable Income * Social Security Rate (capped at $160,200 for 2024)

Medicare Taxes: Taxable Income * Medicare Rate

Example Output

If you have 100 RSUs, and you sell all of them at once, you can expect to pay approximately $X,XXX.XX in taxes on this liquidity event.

How are RSUs taxed?

As you probably know, Restricted Stock Units (RSUs) are a form of equity compensation granted by an employer to an employee in the form of company stock. RSUs are often used as a tool to attract and retain top talent, especially in the tech industry and with startups.

Unlike stock options, RSUs have no exercise price and always have some value to the recipient when they vest. However, they are considered "restricted" because they are subject to a vesting schedule, which means the employee does not receive the shares until certain conditions are met, such as continued employment for a period of time or achievement of specific performance goals.

When RSUs vest, they are considered income and are subject to federal and state income taxes, as well as Social Security and Medicare taxes. The amount of income reported is equal to the fair market value of the shares on the vesting date, multiplied by the number of shares vested.

For example, if an employee is granted 1,000 RSUs that vest over four years and the stock price is $50 on the vesting date, the employee would owe taxes on $12,500 of income (250 shares x $50) for that year.


It's important to note that the taxes owed on RSUs can be significant, especially if the stock price has increased substantially since the grant date. Employees should plan ahead and consider strategies to manage their tax liability, such as selling shares to cover taxes or using a 83(b) election.

Understanding RSU Tax Withholding

When your RSUs vest, your company will typically withhold a portion of the shares to cover the required tax withholding. The two most common methods are:

  1. Net Shares: The company withholds a number of shares equal in value to the tax liability. You receive the remaining shares.
  2. Sell to Cover: The company sells enough shares to cover the tax withholding obligation. You receive the remaining shares and cash from the sale.

    👉 read The Employee's Guide to “Sell to Cover” from UpStock
Some companies may also offer a cash settlement option, where they pay the taxes in cash and you receive the full number of vested shares.

Supplemental Wage Withholding Rate

RSUs are typically treated as supplemental wages for tax purposes. The IRS flat rate for supplemental wage withholding is 22%. However, if your supplemental wages exceed $1 million in a calendar year, the excess is subject to a 37% withholding rate.

Keep in mind, your actual tax liability may be higher or lower than the amount withheld, depending on your individual tax situation. You may need to make estimated tax payments or adjust your W-4 withholding to avoid underpayment penalties.

"RSUs aren't just a one-time bonus or an annual windfall; they can be a critical part of your long-term financial strategy. The key lies in treating them not as an isolated asset but as an integral part of your broader investment portfolio and financial goals." - UpStock

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