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Tax Planning Nov 15, 2025 12 min read
RSU Taxes: A Complete Guide for Tech Workers
Understanding how restricted stock units are taxed and strategies to minimize your tax burden.
Restricted Stock Units (RSUs) are a common form of compensation in tech. However, they come with unique tax implications.
Vesting is a Taxable Event
When your RSUs vest, they are taxed as ordinary income. Your company will usually withhold some shares to pay taxes, but the default withholding rate (22%) is often too low for high earners, leading to a surprise tax bill.
Capital Gains
If you hold the shares after vesting and sell them later, any growth is taxed as capital gains. Holding for >1 year qualifies for lower long-term capital gains rates.
TaxWatch tracks your vesting schedule and estimates your tax liability so you can set aside enough cash.