RSU Vesting Take-Home: What You Actually Keep in 2026
A $50,000 RSU vest doesn't land as $50,000. Here's the 2026 withholding math, why the flat 22% falls short, and how a 100-share vest turns into 60 shares.
This article is general information about payroll withholding, not tax or financial advice. It describes how tax is withheld on a vest, not what you should do with the shares. Your plan documents govern how your employer settles the tax, and individual situations vary. Confirm specifics with a qualified tax professional.
Why 100 shares became 60
Your vest statement said 100 shares. Your brokerage account shows 60. Nobody made a mistake.
A vest is a wage event. The moment the shares are delivered to you, their fair market value becomes ordinary income on your W-2, exactly like salary or a bonus. Tax has to be withheld on it that day, and since you were paid in stock rather than cash, the tax comes out of the stock.
That is the whole story. The rest is arithmetic: how much comes out, where it comes from, and why the total almost never matches the tax you actually owe.
Two things to clear up before the numbers, since both come up constantly.
First, you cannot file an 83(b) election on stock-settled RSUs. Restricted stock units are a contractual promise, not Section 83 property at grant, so there is nothing to make an election against. That option belongs to restricted stock, which is a different instrument. The IRS treats income as recognized when the shares are actually transferred, per Publication 5992 and Chief Counsel Memorandum AM 2020-004.
Second, the vest-date fair market value becomes your cost basis for any later sale. Some 1099-B forms report a $0 basis on RSU shares, which makes it look like the entire sale proceeds are a gain. They are not. You already paid ordinary income tax on the vest-date value, and that value is your basis.
The four withholdings that come out of a vest
Four separate taxes hit a vest, and they stack. The 2026 figures:
Federal supplemental income tax: 22%. RSU income is a supplemental wage under IRS Publication 15. Most payroll systems apply the flat 22% rate to it, and that rate holds until your cumulative supplemental wages from that employer pass $1,000,000 in the calendar year. Above $1,000,000, the excess is withheld at 37%.
Social Security: 6.2%, capped. This applies to your wages up to the $184,500 Social Security wage base for 2026. Once your year-to-date wages exhaust that base, further wages (including vests) skip it entirely.
Medicare: 1.45%, uncapped. Every dollar pays it. On top of that, an Additional Medicare Tax of 0.9% applies to wages above $200,000 for single filers, $250,000 married filing jointly, and $125,000 married filing separately.
State income tax: it depends. Many states apply their own flat supplemental rate. California is the one most RSU recipients run into, and it uses a 10.23% flat withholding rate specifically for bonuses and stock options under its Employment Development Department guidance. That is a distinct figure from California’s 13.3% top marginal rate, and the two get confused often.
Why vest month matters
The Social Security cap means the calendar changes what lands in your account.
Say your base salary will carry you past $184,500 sometime in the fall. A vest in January arrives while you are still under the cap, so it pays the full 6.2%. An identical vest in December arrives after the cap is exhausted, so it pays nothing to Social Security. Same shares, same price, 6.2% difference in withholding.
This does not change your final tax bill for the year (the cap is annual either way), but it does change how many shares land in your account on vest day.
Worked example: 100 shares at $80, California vs Texas
Take someone still under the wage base, settling with sell-to-cover.
| Withholding | California | Texas |
|---|---|---|
| Gross vest value | $8,000.00 | $8,000.00 |
| Federal supplemental 22% | $1,760.00 | $1,760.00 |
| Social Security 6.2% | $496.00 | $496.00 |
| Medicare 1.45% | $116.00 | $116.00 |
| State supplemental (CA 10.23%) | $818.40 | $0.00 |
| Total withheld | $3,190.40 (39.88%) | $2,372.00 (29.65%) |
| Shares sold to cover | 40 | 30 |
| Net shares delivered | 60 | 70 |
The share count is the line to watch. Shares sold is the total tax divided by the vest-date price, rounded up: $3,190.40 ÷ $80 = 39.88, rounded up to 40. That rounding is why sell-to-cover usually deposits a few dollars of residual cash alongside the shares.
Ten shares, or $800 on this vest, is the entire difference between the two states. If you are weighing a move or a remote offer, the state relocation take-home comparison runs the same gap across your full salary.
One caveat on the California column: it excludes state disability and paid-leave contributions, which apply to wages separately from income tax withholding. Those are real deductions in states that levy them, and they are itemized apart from the four taxes above.
Where the money actually leaves from
Your employer picks the settlement method, and it decides where the tax comes from, not how much you owe. Four variants are common.
Net share settlement (share withholding). The company keeps enough shares to cover the tax and remits cash to the government itself. Fewer shares appear in your account, and no sale shows up at your broker for the retained shares.
Sell-to-cover. Your broker sells enough shares on the open market to raise the tax, then delivers the rest. This is what the table above models. You will see a sale on your brokerage statement and usually a small cash residual from the rounding.
Same-day sale. Everything is sold at vest and settles in cash. You keep the after-tax proceeds and hold no shares.
Pay from payroll. You keep 100% of the shares, and the tax is deducted from your regular paycheck instead.
That last one is the one that catches people out.
Take the Texas example: $2,372 of tax on an $8,000 vest. Under pay-from-payroll, all 100 shares land in your account and $2,372 comes out of one biweekly check. If that check normally nets around $5,400, it nets roughly $3,000 that period. Nothing is wrong, but rent is still due.
Larger vests make this worse in a hurry. A $50,000 vest settled from payroll can produce a withholding amount that exceeds a single paycheck’s net pay entirely, at which point payroll spreads it or the employer switches methods. Either way, the first sign is usually a check that looks broken.
If you are trying to reconcile a check against what you expected, gross vs net pay breaks down every line that comes out.
Why 22% usually isn’t enough
22% is not a tax rate, and that is the misunderstanding at the center of all this. It is a withholding default under the flat-rate method in Publication 15, applied without any knowledge of your salary, your filing status, or your bracket.
Your actual tax on the vest is whatever your top marginal rate is once the vest income stacks on top of your salary. For most people receiving meaningful RSU grants, that rate is 24%, 32%, or 35%.
The shortfall, computed
Single filer, tax year 2026. Base salary $200,000 and one RSU vest of $50,000.
Total wages are $250,000. Subtract the 2026 standard deduction of $16,100 and taxable income is $233,900. The vest income sits at the top of that stack, occupying taxable income from $183,900 up to $233,900:
- $183,900 to $201,775 is $17,875 taxed at 24% = $4,290
- $201,775 to $233,900 is $32,125 taxed at 32% = $10,280
- Actual federal income tax on the vest: $14,570, or 29.1% of it
Withholding at the flat 22% supplemental rate produced $11,000.
Federal shortfall on one vest: $3,570.
The FICA side of the same vest is more straightforward. Medicare is 1.45% of $50,000 = $725, plus 0.9% Additional Medicare on the whole $50,000 (base salary already sits at the $200,000 threshold) = $450, for $1,175 total. Social Security adds nothing, because $200,000 of salary already exhausted the $184,500 wage base.
The gap at each bracket
What 22% withholding leaves on the table, per $10,000 of vest value:
| Your marginal bracket | Withheld at 22% | Actual tax | Shortfall per $10,000 |
|---|---|---|---|
| 22% | $2,200 | $2,200 | $0 |
| 24% | $2,200 | $2,400 | $200 |
| 32% | $2,200 | $3,200 | $1,000 |
| 35% | $2,200 | $3,500 | $1,300 |
| 37% | $2,200 | $3,700 | $1,500 |
A vest can also push you across thresholds you were previously under: the $200,000 Additional Medicare line, a state bracket boundary, or an income-based phase-out. The gap widens from there.
The same mechanic drives bonus withholding, and why your bonus gets taxed so much covers the supplemental rate in more depth. If a raise is also in play, does a raise push you into a higher tax bracket sorts out marginal versus effective rates.
Closing the gap before April
Four levers, roughly in order of how reliable they are.
Ask whether your plan allows a higher supplemental rate. Some equity plans let you elect above 22%, and some employers use the aggregate method (which withholds based on your W-4 and can land much closer to your real rate). Many payroll systems only offer the flat 22%. Worth asking, but do not count on it.
Add extra withholding on your W-4, Step 4(c). This is the most underrated fix. Withholding is treated as paid evenly across the year no matter when it actually happened, so a Step 4(c) amount added mid-year can retroactively cure a Q1 shortfall in a way estimated payments cannot. Our guide to adjusting your W-4 to change take-home pay shows how to size the number.
Make an estimated payment. File a Form 1040-ES payment for the quarter the vest landed in. Cleaner if you dislike touching your W-4, but it is timing-sensitive in a way withholding is not.
Check whether you already hit a safe harbor. You owe no underpayment penalty if your withholding plus estimated payments cover 90% of your current-year tax or 100% of your prior-year tax. That prior-year figure rises to 110% if your prior-year AGI exceeded $150,000 ($75,000 married filing separately). There is also no penalty when the balance due comes in under $1,000. IRS Tax Topic 306 has the details.
Two other levers reduce the taxable income the vest stacks onto. The 2026 401(k) elective deferral limit is $24,500, and HSA contributions cap at $4,400 individual or $8,750 family. Neither shields the vest from FICA, but both shrink the income-tax base. The 401(k) paycheck impact calculator shows what a bigger deferral costs you per check.
Model the vest before it lands
None of this needs a spreadsheet. A vest is a supplemental wage event on one pay period, and a paycheck calculator handles that directly.
Salary Calculator (Stub44) models it as a taxable Bonus/Commission entry on the pay period containing the vest. Three inputs matter:
- The vest value as the additional income amount, so it stacks correctly on that period’s wages.
- Year-to-date FICA-taxable earnings, so the $184,500 Social Security wage base truncates at the right point. This is what makes a January vest and a December vest come out differently.
- Your state, which picks up state income tax plus the state-specific items like California SDI and New York PFL that the four-tax table above deliberately leaves out.
Save two profiles, one for a normal pay period and one for the vest period, and the take-home difference is right there side by side. That is the number worth knowing before vest day rather than after. For bonus-shaped events generally, the bonus tax take-home calculator runs the same math in the browser, and you can download Salary Calculator to run it against your real paycheck.
What to check on your next vest statement
- Gross shares vested and the vest-date fair market value per share
- The settlement method, and whether tax came from shares or from payroll
- The federal rate applied (22%, 37%, or an aggregate-method figure)
- Whether Social Security was withheld, which tells you where you sit against the wage base
- Your state’s supplemental rate, if your state has one
- Your marginal bracket, so you know the size of the gap you are carrying into April
Frequently Asked Questions
Why were only 22% of my RSUs withheld for federal tax?
22% is the flat supplemental-wage withholding rate from IRS Publication 15, not your tax rate. Payroll applies it as a default without looking at your salary or your bracket, so it is an estimate rather than a settlement of what you owe.
How many shares do I actually receive after RSU taxes?
Gross shares minus the shares sold or withheld to cover tax. Shares sold equals total estimated tax divided by the vest-date share price, rounded up. On a 100-share vest at $80 with 39.88% total withholding, 40 shares go to tax and 60 land in your account.
Do RSUs get hit with Social Security and Medicare tax?
Yes. RSU vest income is W-2 wages, so it pays 6.2% Social Security up to the $184,500 wage base for 2026, 1.45% Medicare with no cap, and an extra 0.9% Additional Medicare on wages above $200,000 single or $250,000 married filing jointly.
Will my regular paycheck get smaller when RSUs vest?
Only if your employer settles the tax from payroll instead of selling or withholding shares. Under sell-to-cover and net-share settlement, the tax comes out of the shares and your regular paycheck is untouched.
Can I ask my employer to withhold more than 22% on my RSUs?
Sometimes. Some plans allow a higher supplemental election or run the vest through the aggregate method, but many payroll systems only apply the flat 22%. The reliable workaround is extra withholding on your W-4 Step 4(c).
Will I owe a penalty if 22% withholding leaves me short?
Not if you land in a safe harbor: withholding and estimated payments covering 90% of your current-year tax, or 100% of your prior-year tax (110% if your prior-year AGI was over $150,000). There is also no penalty if the balance due is under $1,000.
Can I file an 83(b) election on RSUs to lower my tax?
No. Stock-settled RSUs are not Section 83 property at grant, so there is nothing to make an election on. The 83(b) election applies to restricted stock, not restricted stock units.
Does it matter what month my RSUs vest?
For FICA, yes. Once your year-to-date wages pass the $184,500 Social Security wage base, further vests skip the 6.2% Social Security hit, so an early-year vest is withheld more heavily than an identical late-year vest.