RSU tax calculator — Illinois

How RSU taxes work

When restricted stock units (RSUs) vest, the full fair market value of the shares is treated as ordinary income in that year, exactly like salary. Your employer typically sells or withholds a portion of the shares to cover taxes and reports the value on your W-2.

The catch for high earners is the federal supplemental withholding rate. By default employers withhold federal tax on equity at a flat 22% (rising to 37% on supplemental wages above $1 million in a year). If your marginal tax bracket is 32%, 35%, or 37%, that flat 22% leaves a meaningful gap that you will owe when you file.

What this calculator estimates

This tool adds up the four pieces of withholding that apply to an RSU vest:

• Federal income tax at the supplemental rate
• State income tax at your state’s supplemental rate (some states, like Texas and Washington, have none)
• Social Security, which only applies until your total wages reach the annual wage base
• Medicare, including the additional 0.9% that high earners owe above the threshold

Enter the value vesting, your state, and the wages you have already earned this year (so the Social Security cap is applied correctly), and you will see the estimated total withheld, your effective rate on the vest, and your net.

The high-earner gap

Because the 22% flat rate sits well below the top brackets, a six-figure vest can leave you owing thousands at tax time even though “taxes were taken out.” The fix most people use is to make a quarterly estimated payment for the difference, or to raise their regular paycheck withholding. Use the effective rate this calculator shows versus your real marginal rate to size that gap.

RSUs also interact with your other equity. If you also hold incentive stock options, exercising them can trigger the alternative minimum tax in the same year, so it is worth modeling both together.