Your RSU withholding
probably isn't your real tax rate.

How it works

22% is a withholding rate, not a tax rate.

When RSUs vest, the value of the shares — shares × fair market value on the vest date — becomes ordinary W-2 income, immediately. Your employer withholds tax on it the same way they'd withhold on a cash bonus: at a flat statutory rate for "supplemental wages," not by calculating your actual marginal bracket. That flat rate is convenient for payroll systems, but it has nothing to do with what you actually owe.

The flat rate, and when it jumps

Federal supplemental-wage withholding is 22% on most vests. Once your aggregate supplemental wages for the calendar year — RSU vests, bonuses, and similar pay combined — cross $1,000,000, the rate on the excess jumps to a mandatory 37%. These rates are confirmed permanent by IRS Publication 15, not a temporary provision.

The gap that causes April surprises

22% sits in the middle of the federal bracket structure — it's roughly the 22%/24% bracket boundary for a single filer. Anyone whose total income (including the vest) lands in the 32%, 35%, or 37% brackets is being under-withheld on every vest, often by a wide margin. This isn't a payroll error to complain about — it's simply how the withholding rules work — but it does mean RSU recipients specifically need to plan for the gap themselves, often through an increased W-4 or a quarterly estimated payment.

A worked example

500 shares vesting at $80/share is a $40,000 vest. Flat federal withholding at 22% takes $8,800. For a single filer with $150,000 in other income, the REAL federal tax on that $40,000 slice — computed the correct way, as the actual difference in tax with and without the vest, not just the top bracket rate applied to the whole amount — comes to $9,600. That's an $800 federal withholding gap on this one vest alone; multiply that across several vests a year and the year-end shortfall adds up fast.

The broker $0-cost-basis trap

This is the single most consequential RSU tax mistake, and it's common because it's not really anyone's fault: many brokers report a cost basis of $0 on Form 1099-B for vested shares, because their systems don't always carry forward the fact that the shares' value was already taxed as ordinary income at vest. Left uncorrected on Schedule D/Form 8949, that $0 basis means your entire sale proceeds get taxed AGAIN, this time as capital gain — a real double-tax on money that already went through payroll withholding once. The fix is simple once you know to look for it: your real cost basis is the fair market value per share on the vest date, and you adjust the 1099-B figure to match before filing.

Vest date, not grant date

The capital-gains holding-period clock starts when shares actually vest, not when they were originally granted — a distinction that trips people up because "grant date" is the date most people mentally associate with owning the RSUs. Sell immediately at vest and there's essentially no capital gain to speak of (basis ≈ sale price); hold more than a year past vest and any further appreciation gets long-term treatment instead of short-term.

Disclaimer

This calculator provides an educational estimate based on 2026 IRS and California guidance and does not replace advice from a licensed CPA or tax attorney. It does not model state income tax brackets (only flat supplemental withholding rates), the Net Investment Income Tax, AMT, or every state's specific supplemental-wage rules beyond the California preset.