Insights & Resources > RSU Tax Withholding Calculator
RSU Tax Withholding Calculator
Estimate income taxes on your vesting RSUs.
If you’re a tech professional who receives Restricted Stock Units (RSUs) as part of your compensation package, you know that navigating the tax landscape can be challenging. RSUs can be a valuable addition to your income, but under-withholding is a very common problem.
Most companies withhold taxes at only 22% by default. If you make over $90k/$180k (single/joint) then you’re likely not withholding enough and you may be hit with unexpected tax bills.
We’ve developed this simple RSU Tax Withholding Calculator for you to use to calculate the income tax impact of RSUs vesting in any given year. It is intended to provide you with an early indication as to whether you might want to increase your withholdings or set extra cash aside for taxes.
Please keep in mind, this is only for income taxes on your vesting RSUs. Capital gains taxes are separate and will be incurred when you sell your RSUs, but they are not contemplated here.
Feeling overwhelmed by the tax season in 2024? We can connect you to a trusted third-party tax firm with expertise in RSUs. For valued clients of Forrest Financial Partners, your tax preparation fee will be covered!
How to Use the RSU Tax Withholding Calculator
It’s important to note that this RSU Tax Withholding Calculator is intended to be used for the entire year’s batch of vesting RSUs, not for a single vesting period or for a multi-year RSU grant. This is so that you can determine the potential tax impact for the year. If you’d like to analyze the impact of a broader RSU grant, please get in touch and we can help put together a more complex analysis.
Inputs
- Number of RSUs Vesting – the number of RSUs that you expect to vest this year.
- Expected Share Price at Vesting – this will be a little bit of a guess, but this should be your best estimate as to the average price of all shares for the year at vesting.
- Marital Status – for simplicity’s sake, simply choose “single” or “joint” based on your tax filing status.
- Total Salary + Cash Bonus – enter your total gross cash compensation. Do not include any equity compensation.
- State Tax Bracket – enter the tax bracket you fall into for your state’s income tax
- Stock Ticker – enter your company’s stock ticker (if applicable)
The calculator will use these inputs to estimate your federal tax bracket. It is important to note that the calculator uses only these inputs and does not take into account any other factors such as tax deductions or other sources of income.
If you believe the calculator should use a different federal tax rate, simply enter it into the “Federal Tax Bracket (Override)” field. The calculator will then use that value instead of the calculated one.
Outputs
The calculator will take all of your inputs, and produce the following information:
- Estimated Taxes Due from Vesting RSUs – an estimate of the total tax liability generated from your vesting RSUs.
- Estimated Taxes Withheld Vesting RSUs – an estimate of the total taxes withheld by your company.
- Anticipated Tax Shortfall – an estimate of the size of any potential tax liability.
This RSU tax withholding calculator can serve to give you an estimate for the tax impact of your vesting RSUs, but it’s important to note that it is just an estimate. It is unable to take into consideration factors that are specific to your life and financial situation, and thus should only be relied upon as a general indicator, not as a specific answer or recommendation for you personally.
It’s important that you have a conversation with your financial or tax advisor to create a plan for your vesting RSUs that is specific to you and your financial situation.
At Forrest Financial Partners, we specialize in helping you plan for your vesting RSUs (and much more) as part of our comprehensive financial planning process. If you’d like to have a conversation about how we can help you achieve your goals, please get in touch.