RSU Tax Rate: How Much Tax Do You Really Owe on RSUs in 2025?

Your RSU tax rate is not the 22% your employer withholds. Because RSUs are taxed as ordinary income, your real RSU tax rate is the sum of your federal marginal rate (up to 37%), state tax (0-13.3%), and Medicare — typically 40-55% for tech employees.

What Is Your RSU Tax Rate?

RSUs are taxed as ordinary income when they vest, and the value is reported on your W-2 (IRS Publication 525). There is no special capital gains rate, no deferral, and no election to delay taxes. The moment shares land in your brokerage account, the IRS considers it income — identical to your salary.

Your RSU tax rate is the combination of:

• Federal income tax (10-37%)
• State income tax (0-13.3%)
• FICA taxes (Social Security + Medicare)

The total depends on your other income, filing status, and state. For the full picture of how RSUs are taxed across both vesting and selling, see our complete guide to RSU taxation.

Federal Tax Rate on RSUs

RSU income is added on top of your salary to determine your marginal federal rate. Here are the 2025 brackets for single filers (see the complete 2026 federal tax brackets for all filing statuses):

Example: You earn a $200,000 salary. Your RSUs vest and add $100,000. That $100K is taxed at your marginal rate — which starts at 32% and may push into 35%.

State Tax Rate on RSUs

State tax varies dramatically and can be the largest surprise:

The chart below shows how the same RSU vest lands very differently depending on where you live. If you vest in a high-tax state, it's worth reading a state-specific breakdown — for example, our guides on how New York taxes and withholds on RSU vesting and Massachusetts RSU vesting and its millionaire surtax walk through the local withholding mechanics in detail.

Deep dives by state: California Income Tax Guide | New York Income Tax Guide | Texas Income Tax Guide | Washington Income Tax Guide | Full State Tax Comparison

FICA Taxes on RSUs

RSU income is subject to Medicare taxes. Social Security depends on whether you've hit the wage base:

• Social Security: 6.2% on income up to $176,100 (2025). Most tech employees hit this from salary alone, so RSUs often aren't subject to SS.
• Medicare: 1.45% on all income, no cap
• Additional Medicare Tax: 0.9% on income over $200,000 (single) / $250,000 (married)

For a single filer earning $200K+ salary, FICA on RSUs is typically just 2.35% (Medicare + Additional Medicare).

Why 22% Withholding Is Not Your RSU Tax Rate

This is the core problem. Your employer withholds 22% federal on RSU income (the "supplemental income" rate). But your actual marginal rate is likely 32-37%.

Example: $200K salary + $100K RSU in California

You owe an additional $12,270 when you file. Without planning, this becomes an unpleasant April surprise.

Worked Example: $150K Salary + $50K RSU (California)

Here's a more accessible example showing the full tax walkthrough at a lower income level.

Federal tax (incremental method, single filer, 2025):

• Total W-2 income: $200,000 ($150K salary + $50K RSU)
• Standard deduction: $15,750
• Taxable income: $184,250
• Federal tax on $200K total: ~$34,300
• Federal tax on $150K salary alone: ~$24,500
• RSU-attributable federal tax: ~$9,800
• Federal withheld at 22%: $11,000
• Federal result: over-withheld by ~$1,200 (the 22% rate slightly exceeds the 24% marginal because the first portion of RSU income fills up the remaining 22% bracket)

California state tax (incremental method):

• CA tax on $200K total: ~$10,800
• CA tax on $150K salary alone: ~$6,150
• RSU-attributable CA tax: ~$4,650 (effective 9.3% marginal)
• CA withheld at 10.23%: $5,115
• CA result: over-withheld by ~$465

Medicare:

• Medicare on RSU: $50,000 × 1.45% = $725
• Additional Medicare: $0 (income under $200K threshold with RSU)
• Medicare withheld: $725
• Medicare result: exact match

Total shortfall: ~$0 to small refund at this income level. The 22% federal supplemental rate actually covers the 24% marginal rate because the first ~$3K of RSU income is still taxed at 22%. However, as income rises, the shortfall grows rapidly — see the table below.

RSU Tax Rate by Income Level

Here's what your effective RSU tax rate looks like at different income levels (single filer, California):

For Washington or Texas residents, subtract 10-13% since there's no state income tax. Flat-rate states sit in between: if you're in a state like Colorado or Pennsylvania, the math is more predictable, but the withholding gap still bites — see how Colorado handles RSU vesting and withholding and the Pennsylvania flat-rate approach to RSU income for the state-level details.

How to Plan for the RSU Tax Gap

1. Adjust Your W-4

Add extra withholding on your regular paychecks to pre-pay the expected shortfall. On Form W-4, Step 4(c), enter the additional dollar amount per paycheck.

Example: You estimate a $12,200 annual shortfall ($200K salary + $100K RSU in California). You have 24 semi-monthly pay periods remaining. Enter $508 on Line 4(c) — that's $508 × 24 = $12,192 in additional withholding, nearly covering the gap. The advantage of W-4 over estimated payments: paycheck withholding is treated as if paid evenly throughout the year, avoiding underpayment penalties for earlier quarters.

2. Make Estimated Tax Payments

Pay quarterly estimates (Form 1040-ES) after large vesting events. This avoids the underpayment penalty (approximately 7-8% annually in 2026 per IRC Section 6654), which is computed on IRS Form 2210.

Example ($12,200 shortfall spread quarterly):

For a complete walkthrough of estimated tax payments on RSU income, including safe harbor rules, see our estimated tax guide for RSU income.

3. Sell-to-Cover at the Right Rate

If your broker (Schwab, E*Trade, Morgan Stanley) lets you specify a sell-to-cover percentage, set it to your actual marginal rate instead of the default 22%. (For the full mechanics, see our RSU sell to cover guide.)

This eliminates the shortfall entirely — you just keep fewer shares at vesting.

4. Set Aside Cash from Each Vest

A simple rule: set aside 50% of each RSU vest if you're in California or New York, or 40% if you're in a no-income-tax state (Texas, Washington, Florida). Anything leftover is a bonus. For a $50K quarterly vest in California, that means setting aside $25,000 — more than your broker's sell-to-cover amount, but the surplus protects you from any April surprise.

Calculate Your Exact RSU Tax Rate

Your situation is unique — your salary, RSU amount, state, filing status, and deductions all affect the final number. Our RSU Calculator computes your exact shortfall using the incremental tax method described in this guide.

Frequently Asked Questions

What is my RSU tax rate? Your RSU tax rate is the combination of your federal marginal rate (22-37%), state income tax (0-13.3%), and Medicare taxes (2.35%). For most tech employees, the total effective rate on RSU income is 40-55% depending on salary level and state of residence. Use our RSU Calculator to find your exact rate.

Is the RSU tax rate 22% or higher? The 22% rate is only the federal withholding rate for supplemental income — it is not your actual tax rate. Your employer is required to withhold at this flat rate regardless of your tax bracket. If your total income exceeds $197,300 (single), your marginal federal rate alone is 32-37%, making 22% withholding insufficient.

Do RSUs push me into a higher tax bracket? Yes, RSU income stacks on top of your salary and pushes your total income into higher brackets. However, only the dollars in the higher bracket are taxed at the higher rate — your entire income is not retroactively taxed at the new rate. This is the marginal vs effective tax rate distinction.

Are RSUs taxed differently than salary? RSUs are taxed at the same ordinary income rates as salary. The difference is in withholding: salary withholding uses your W-4 elections (which account for your full tax picture), while RSU withholding uses the flat 22% supplemental rate. This withholding gap is why RSU holders often owe additional tax at filing time.

What is the RSU tax rate in California? In California, your RSU tax rate combines federal marginal tax (32-37% for most tech workers), California state tax (9.3-13.3% marginal), and Medicare (2.35%) — totaling 43-53%. If your total taxable income exceeds $1M, California adds a 1% Mental Health Services Tax surcharge, pushing the combined rate above 55%.