RSU tax hub · United States
US residents with US RSUs
Ordinary income at vest (W-2). Capital gains short-term (≤1 year) at ordinary rates, long-term at 0%/15%/20% + 3.8% NIIT. ESPP qualifying disposition saves materially in tax. Concentration risk is the biggest strategic issue.
Executive summary
If you're a US tax resident vesting US RSUs, you face the same federal income tax mechanics as W-2 wages — ordinary income at marginal rates up to 37% federal — plus FICA (Social Security + Medicare) up to wage base limits. Your employer handles withholding via either sell-to-cover (default at most brokers) or net settlement. The cost basis for future capital gains computation equals the FMV at vest, the same value already taxed as ordinary income.
The strategic decisions facing you are NOT about the vest tax mechanics — those are automatic — but about what happens AFTER. Sell at vest for diversification (the textbook answer) versus hold for conviction. If holding, holding past 12 months unlocks long-term capital gains rates (0%/15%/20% federal + 3.8% NIIT) versus short-term rates that are simply your ordinary income rate.
State tax is the largest controllable variable. California's 13.3% top rate vs Texas/Florida/Nevada/Washington's 0% creates a $50K-$150K/year difference for high-comp RSU holders. The mechanic isn't where you live at vest — it's where you worked DURING the vesting period (workdays apportionment). California's trailing nexus rule (§17952) taxes RSUs vested for California-period services even after you leave the state.
For ESPP holders, the qualifying disposition (>2 years from grant + >1 year from purchase) saves materially in tax versus disqualifying. For ISO holders, the AMT trap requires modeling — large ISO exercises in high-AMT-income years can trigger six-figure AMT preference income inclusions.
Start here — the complete guide
US residents with US RSUs: complete tax + strategy guide for 2026 →
3,500-word framework covering vest, sale, ESPP, AMT, NIIT, state tax, concentration risk, decision frameworks.
Quick reference
Key tax rates, thresholds, and filing details for United States residents.
- Vest tax
- W-2 ordinary income at marginal rate (10%-37% federal)
- Supplemental withholding 22% (≤$1M), 37% (above)
- Short-term CGT (≤1 year)
- Ordinary income rates (10%-37%)
- Long-term CGT (>1 year)
- 0% / 15% / 20% based on income
- NIIT
- +3.8% if MAGI > $200K single / $250K MFJ
- Cost basis
- FMV at vest (W-2 Box 1 inclusion)
- Tax year
- Calendar year (Jan-Dec)
- Filing form
- Form 1040 + Schedule D + Form 8949
- Key consideration
- Concentration risk + state tax variation
What happens at vest
Step-by-step walkthrough of the United States mechanics when your US RSUs vest.
- 1
Shares released at vest-date FMV
Your RSU grant becomes shares at the closing price (or vest-eve reference price, plan-dependent) on the vest date. This FMV × shares = vest income.
- 2
FMV × shares added to W-2 Box 1
The vest value is included in your W-2 Box 1 wages for the calendar year, alongside salary and bonuses. State wages (Box 16) include it too for resident states.
- 3
Federal income tax withholding
Withheld at the supplemental wage rate: 22% on first $1M of supplemental wages in calendar year, 37% above. Note this is usually LOWER than your marginal rate for high earners — you may owe additional tax at filing.
- 4
FICA withholding
Social Security 6.2% up to $168,600 wage base (2026); Medicare 1.45%; Additional Medicare 0.9% on wages above $200K single / $250K MFJ.
- 5
State income tax withholding
At your state's supplemental rate. California 10.23%, New York 11.7%, Texas/Florida/Nevada/Washington 0%.
- 6
Sell-to-cover or net settlement
Default at most brokers: sell enough shares to cover withholding. You keep the remaining shares (~63-78% of vest value). Net settlement: company holds back enough to cover, you receive only the net shares.
- 7
Remaining shares land with cost basis = FMV at vest
Critical: this is the basis for future capital gains computation. Verify your 1099-B shows correct cost basis — some brokers report $0 incorrectly.
Filing calendar & deadlines
The key dates that matter for United States RSU holders.
| Event | Date | Form / consequence |
|---|---|---|
| Federal income tax return due | April 15 | Form 1040 + Schedule D + Form 8949Failure-to-file penalty 5%/month up to 25% |
| Q1 estimated tax payment (if applicable) | April 15 | Underpayment penalty if owe >$1,000 and didn't pay safe harbor |
| Q2 estimated tax payment | June 15 | |
| Q3 estimated tax payment | September 15 | |
| Q4 estimated tax payment | January 15 (following year) | |
| FBAR (FinCEN 114) for foreign accounts > $10K aggregate | April 15 (auto-extended to October 15) | Up to $10K civil penalty per non-willful violation |
Best brokers & platforms
The platforms worth knowing for United States residents holding US stocks.
Charles Schwab Equity Award Center
Most common employer-broker integration. Strong reporting, generous sell-to-cover defaults, mobile app handles vest events cleanly.
Fidelity Stock Plan Services
Major employer-broker integration. Cleanest tax reporting (1099-B + supplemental). Good for HSA + 401k + brokerage consolidation.
E*TRADE from Morgan Stanley
Common employer-broker. The Morgan Stanley acquisition brought workplace and retail under one roof. Strong RSU and ESPP tooling.
Interactive Brokers
For self-directed RSU holders after vest. Lowest commissions, best FX rates, broad market access. Less integrated with employer plans.
Common mistakes (and what they cost)
The errors United States RSU holders make most often.
Spending the vest as if withholding fully covered the tax
Supplemental withholding (22%) is lower than your marginal rate (24-37%) for most high earners. You'll owe additional tax at filing. Set aside the gap when the vest hits.
Cost: $10K-$50K underpayment at filing on a typical high-comp vest
Forgetting California trailing nexus on RSUs after moving
California §17952 taxes RSUs vested for California-period services even after you leave. Workdays apportionment determines the California share. Document your move and workdays carefully.
Cost: 13.3% of California-attributed vest portion
$0 cost basis reported on 1099-B
Some brokers report cost basis as $0 (not FMV at vest). You'd pay double tax — ordinary income at vest + capital gains on the entire sale value. File Form 8949 with adjustment.
Cost: Up to your marginal rate × full sale value if uncorrected
Holding RSUs past 12 months for LTCG without conviction
The 7-10 point rate spread (24% → 15%) isn't worth holding a stock you'd otherwise sell. Concentration risk + price drop can dwarf the tax saving.
Cost: Material if stock drops 30%+ during holding period
ESPP disqualifying disposition by accident
Selling before 2 years from grant + 1 year from purchase converts the discount to ordinary income (uncapped) and any gain to short-term. The qualifying disposition can save 10-15% of total ESPP value.
Cost: 10-15% of ESPP value
Deep dives
8 live articles · 2 coming soon
- AMT planning for ISO holders (coming soon)
- Mega Backdoor Roth strategy for RSU holders (coming soon)
Frequently asked questions
How are US RSUs taxed for US residents at vest?
Vest value (FMV × shares) is added to W-2 Box 1 as ordinary income. Employer withholds federal income tax at supplemental rate (22% on first $1M, 37% above), FICA (Social Security 6.2% + Medicare 1.45% + Additional Medicare 0.9% above $200K wages), and state income tax. The cost basis for future capital gains = FMV at vest.
What's the long-term capital gains rate on US RSU sales?
0%/15%/20% federal depending on taxable income bracket. Plus 3.8% Net Investment Income Tax (NIIT) if Modified Adjusted Gross Income exceeds $200K single / $250K married. Top combined federal rate for high earners: 23.8%. Plus state tax (CA up to 13.3%, TX/FL/WA 0%).
Should I sell at vest or hold?
Default counsel for diversification: sell at vest. Holding concentrates risk in employer stock — which is also your income source. Hold only with strong conviction in the specific stock + acceptance of concentration risk. If you hold, hold for >1 year to unlock LTCG rates.
Does the 22% withholding cover my full tax liability?
Usually no, if you're above the 24% federal bracket. For someone in the 32-37% bracket, you'll owe an additional 10-15 percentage points at filing. Plan cash flow: set aside the difference between supplemental withholding and your marginal rate when the vest hits.
What's the cheapest US state for RSU holders?
Texas, Florida, Nevada, Washington (ordinary income), Wyoming, Tennessee, South Dakota, and Alaska all have zero state income tax. For a $500K-vest year, the savings vs California 13.3% is $66,500/year. Washington added a 7% capital gains tax on long-term gains above $250K in 2022 — still less than California.
What is NIIT and when does it apply?
Net Investment Income Tax: 3.8% on capital gains and dividends if your Modified Adjusted Gross Income exceeds $200K single / $250K MFJ. For high-comp RSU holders, NIIT is almost always triggered. Effective top LTCG rate becomes 23.8%. NIIT does NOT apply to RSU vest income (ordinary income, not investment income).
When do I owe estimated tax payments on RSUs?
If your tax liability exceeds withholding by more than $1,000, you must make quarterly estimated tax payments to avoid the underpayment penalty (current rate ~8%). Safe harbor: pay either 100% of prior year tax (110% if AGI > $150K) or 90% of current year tax in four equal installments. For RSU holders, this often requires Q1 estimated tax in April after a big year-end vest.
Related country hubs
Compare US RSU treatment across other major markets.
United Kingdom
UK residents with US RSUs
PAYE + NIC at vest (up to 47% combined). CGT on sale at 18%/24% post-30 Oct 2024. US-UK DTC reduces dividend WHT to 15%. SA106 (foreign income) + SA108 (capital gains) on Self Assessment.
Singapore
Singapore residents with US RSUs
IRAS taxes vest as employment income (0%-24% progressive). No capital gains tax — major advantage. US 30% dividend WHT (no DTC reduction). Foreign-sourced income exemption means Singapore doesn't tax US dividends received.
Canada
Canadian residents with US RSUs
CRA taxes vest as employment income at combined federal+provincial marginal rate (up to 53.5% in BC). 50% capital gains inclusion. T1135 disclosure required if foreign property cost > CAD 100K. RRSP gives US dividend Treaty exemption.
Browse all country markets and RSU tax hubs.