Why do tech workers often owe large taxes in April after RSU vests?

Brokers withhold only 22% federal tax by default. If your marginal bracket is 32%, 35%, or 37%, you are underwithheld by 10% to 15% on every vest.

What is the cost basis of the remaining RSU shares delivered?

Your cost basis for capital gains is the fair market value per share on the vest date. If you sell immediately, you owe zero capital gains tax.

Can I change my broker RSU withholding rate?

Most equity management platforms (E*TRADE, Morgan Stanley, Schwab) now allow employees to elect higher supplemental withholding (e.g. 37%) to avoid surprise tax bills.

Finance100% Free & Browser-Safe🇺🇸United States (US)💵$ (USD)📜IRS RSU Supplemental Withholding Rules

US RSU Tax Sell to Cover Calculator

Calculate shares sold to cover federal and state withholding taxes on equity vesting and quantify underwithholding tax gaps for tech employees.

100% Private — Processed Locally in Your Browser• Executed via native Web APIs. Zero files or data ever leave your device.

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Input Parameters

Vested Shares Count

Share Price on Vest Date ($)

Broker Federal Withholding Rate (%)

State Tax Rate (%)

Your True Marginal Tax Bracket (%)

Calculated Results

● Live Update

Net Shares Delivered to Portfolio

128

Shares Sold to Cover Taxes

Total Tax Dollars Withheld by Broker

$12,478

Estimated April Tax Shortfall (Owed)

$4,550

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1How to Use US RSU Tax Sell to Cover Calculator

When Restricted Stock Units (RSUs) vest, they are treated as taxable ordinary income. Brokers automatically execute a "sell to cover" order, selling a portion of shares to satisfy withholding taxes.

Step 1.Enter the total number of RSU shares vesting in this tranche.
Step 2.Enter the fair market share price on the official vest date ($).
Step 3.Enter broker federal withholding (default: 22%) and state tax rate.
Step 4.Enter your true top federal tax bracket to reveal any underwithholding shortfall.

2Formulas, Methodology & Key Features

RSU Sell to Cover Mathematical Formula

The broker sells the minimum integer number of shares required to cover estimated statutory withholding taxes based on closing share price:

Gross Value = Shares × Share Price Withheld $ = Gross Value × (22% Fed + 7.65% FICA + State%) Shares Sold = Ceil(Withheld $ / Share Price) Tax Gap = (Gross Value × True Bracket) - Withheld $

3RSU Vesting & Sell to Cover Matrix ($)

Shares Vesting	Share Price ($)	Gross Value ($)	Shares Sold	Net Shares Delivered
100 shares	$150 / share	$15,000	36 shares	64 shares
250 shares	$150 / share	$37,500	89 shares	161 shares
500 shares	$300 / share	$150,000	179 shares	321 shares
1,000 shares	$300 / share	$300,000	357 shares	643 shares

?Frequently Asked Questions (FAQ)

Common questions answered about US RSU Tax Sell to Cover Calculator.

RSUs are taxed as ordinary compensation the moment they vest. Selling to cover is the standard automated method to pay IRS and state taxes without requiring out-of-pocket cash.

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