RSU Vesting & Take-Home Calculator
Estimate your net RSU payout after federal, state, and FICA taxes. View your vesting schedule and "sell-to-cover" projections instantly.
What Are RSUs?
Restricted Stock Units (RSUs) are a form of employee compensation where your company promises to give you shares of stock, but only after certain conditions are met—specifically, vesting. Think of it like a savings account that unlocks over time rather than a standard cash salary.
Unlike a salary, RSUs fluctuate in value with the stock price and often hit in lump sums known as cliffs. It is crucial to understand the difference between being granted shares (which are just "paper" promises) and vesting them (which converts them into actual cash or stock in your brokerage account). RSUs generate Ordinary Income the moment they vest.
Understanding Your RSU Grant
Vesting Schedule
The timeline dictating when you earn your shares. This is often "Grading" (monthly or quarterly) or "Back-loaded." A standard schedule is 4 years, meaning you earn the right to keep 25% of the grant each year.
The Cliff
An "all-or-nothing" period at the start of your vesting schedule. If you leave the company even one day before the cliff date, you forfeit 0% of the shares. Passing the cliff usually guarantees the first year's worth of shares.
Fair Market Value (FMV)
The price of the stock on the public market (e.g., NYSE, NASDAQ). For tax purposes, it is the FMV on the vesting date that matters, not the price when you were hired or granted the award.
Tax Rates
RSUs are taxed as Supplemental Income. Your employer withholds Federal, State, and FICA (Social Security and Medicare) taxes. The flat withholding rate is often 22% for Federal, but you may owe more if your total income pushes you into a higher bracket.
How We Calculate Your Take-Home Pay
The Formula
Net Proceeds = (Shares Vested × Current Price) - Total Taxes
Where:
- Shares Vested: The number of shares releasing on a specific date.
- Current Price: The Fair Market Value (FMV) on the vesting date.
- Total Taxes: Sum of Federal, State, and FICA withholdings.
We assume a "Sell-to-Cover" strategy for this calculation, meaning enough shares are sold immediately to cover the tax bill, leaving you with the remaining net shares or cash. Note that the "Taxable Event" is the Vesting Date.
How to Use This Calculator
- Locate your Grant Summary or "Total Shares" number from your equity platform (e.g., Equity Edge, Charles Schwab).
- Check the Vesting Schedule tab to confirm your Cliff date and vesting frequency (Monthly vs. Quarterly).
- Input the current live stock price (available on Google Finance or Yahoo Finance).
- Estimate tax rates using our presets or enter your specific effective tax rate.
Pro Tip
Update the stock price regularly to see how market volatility impacts your potential payout before the vesting date arrives.
Interpreting Your RSU Results
Once you run the calculation, use these benchmarks to understand what the numbers mean for your wallet.
High Net Payout
If your Net Proceeds are significant (e.g., > $50k), treat this like a bonus. Automate transfers to savings or investments immediately to avoid lifestyle creep.
Effective Tax Rate > 40%
You are losing nearly half to taxes. Consider maximizing 401k/403b contributions before the vesting date to lower your taxable income for the year.
Approaching Cliff Date
Ensure you stay employed until this date. Leaving even one day early could mean forfeiting the entire amount vesting on that cliff.
RSUs vs. Stock Options: What's the Difference?
| Feature | RSUs (Restricted Stock Units) | ISOs (Incentive Stock Options) |
|---|---|---|
| Taxation | Taxed as Ordinary Income at vesting. | Taxed at sale (Capital Gains) if rules met; no tax at vesting. |
| Cost | Free. No purchase price required. | Requires paying the "Strike Price" to buy shares. |
| Value | Always has value (if stock price > $0). | Only has value if Stock Price > Strike Price. |
| Best For | Stability and lower risk profile. | High growth potential startup scenarios. |
Why Your Actual Payout May Differ
- Market Volatility: The calculator uses today's price. If the stock drops 20% by the time you vest, your actual payout drops 20%.
- Progressive Tax Brackets: We use a flat rate for estimation. Real taxes might be higher if this RSU income pushes you into a new marginal tax bracket.
- Job Termination: Leaving the company usually stops future vesting immediately. Unvested shares are typically forfeited.
- Sell-to-Cover vs. Hold: If you choose to hold the stock rather than sell immediately, you will owe capital gains tax later on any growth. This calculator assumes selling immediately.
Planning Your Financial Future with RSUs
Use Case 1: The House Down Payment
Use the "Next Payout Est" to determine exactly when funds will hit your brokerage account. Coordinate this timeline with your closing date to ensure liquidity for your down payment.
Use Case 2: Job Offer Evaluation
Input a potential new employer's grant offer into the calculator. Compare the "Net Proceeds" value against a competing offer's higher base salary to see the true Total Compensation.
Use Case 3: Tax Withholding Adjustment
If the calculator shows a massive tax liability, you might need to increase your W-4 withholdings on your regular paycheck. This helps avoid an underpayment penalty at tax time.
Calculator Limitations
Important Disclaimer
Not Financial Advice: This tool is for estimation purposes only and does not replace professional tax advice from a CPA.
- Flat Rate Limitation: Real US taxes are progressive, not flat. High earners may owe more than the standard 22% withholding.
- FICA Cap: Social Security tax stops at the wage base limit (~$168,000 in 2024). Our flat rate might slightly overestimate FICA for high earners.
- State Tax Nuances: Some states (like TX or WA) have 0% income tax, while others (CA, NY) are high. Please verify your specific state rate.
Frequently Asked Questions About RSU Vesting
Sources & References
- IRS Publication 525: Taxable and Nontaxable Income.
- IRS Topic 427: Stock Options.
- SEC Regulations: Employee Compensation Reporting rules.
- Note: Tax rates updated based on 2024 IRS brackets and Social Security Wage Base limits.
About the Author
Nithya Madhavan
Web developer and data researcher creating accurate, easy-to-use calculators across health, finance, education, and construction and more. Works with subject-matter experts to ensure formulas meet trusted standards like WHO, NIH, and ISO.