Tech Employee RSU & Stock Options Simulator
Understand exactly how much of your equity you will actually keep after taxes. Model your RSU vesting schedule or your NSO/ISO options exercise scenario.
Equity Details
Tax Assumptions
Net Equity Value
About the RSU and stock options simulator
The tech RSU and options simulator estimates how much of an equity grant a US employee actually takes home after federal supplemental withholding, FICA, state tax, and (for NSOs) the cash strike payment. It models the 2026 IRS supplemental rates, the 176,100 dollar Social Security wage base, and Bay Area state tax to surface the gap between gross grant value and net cash in hand.
How it works: vest, exercise, and tax math
RSUs and NSOs both end up taxed as ordinary W-2 income, but the trigger and the cash mechanics differ. RSUs tax on vest; NSOs tax on exercise. ISOs follow a separate AMT track.
RSU at vest: ordinary income = units_vested * FMV_vest federal withholding = ordinary_income * 22% (37% above 1,000,000 supplemental YTD) FICA SS = min(ordinary_income, 176,100 - prior YTD) * 6.2% FICA Medicare = ordinary_income * 1.45% Additional Medicare = max(0, ordinary_income - 200,000) * 0.9% (single) state (CA) = ordinary_income * 10.23% (CA supplemental rate) net = ordinary_income - all withholdings NSO at exercise: spread = units * (FMV_exercise - strike) ordinary income = spread taxes apply to spread; cash out of pocket = units * strike Capital gains on later sale: basis = FMV at vest (RSU) or FMV at exercise (NSO) gain = sale_price - basis holding > 1 year = long-term (0 / 15 / 20%) holding <= 1 year = short-term (ordinary rates)
- units = number of shares vesting or being exercised.
- FMV = fair market value of the share on the vest or exercise date.
- strike = the contractual purchase price for option holders; zero for RSUs.
- 22 percent = 2026 statutory federal supplemental withholding rate up to 1,000,000 dollars of YTD supplemental wages.
- 37 percent = mandatory federal supplemental rate on the portion above 1,000,000 dollars.
- 176,100 dollars = 2026 Social Security wage base; FICA SS stops above this.
Worked example: 5,000 RSUs vest at 50 dollars FMV in California
Assume a single Bay Area engineer with no prior YTD supplemental wages, base salary already past the SS wage base, vesting 5,000 shares at a 50 dollar fair market value.
- Ordinary income: 5,000 x 50 = 250,000 dollars.
- Federal supplemental withholding: 250,000 x 22 percent = 55,000 dollars.
- Social Security: 0 dollars (base salary already filled the 176,100 dollar wage base).
- Medicare 1.45 percent: 250,000 x 1.45 percent = 3,625 dollars.
- Additional Medicare 0.9 percent (above 200,000 dollars single): 250,000 x 0.9 percent = 2,250 dollars.
- California supplemental 10.23 percent: 250,000 x 10.23 percent = 25,575 dollars.
- Total withheld: 55,000 + 3,625 + 2,250 + 25,575 = 86,450 dollars.
- Net cash deposited after sell-to-cover: 250,000 - 86,450 = 163,550 dollars (about 1,729 shares sold to cover).
- True tax owed at filing: closer to 35 percent federal + 10.23 percent state + Medicare = approximately 115,000 dollars, so plan an estimated payment of about 28,000 dollars by Q4.
2026 RSU vest scenarios at four grant sizes
Bay Area single filer, base salary already above 176,100 dollars (no SS owed), no prior YTD supplemental wages this year, California 10.23 percent supplemental state rate.
| Grant FMV | Federal 22% / 37% | Medicare + Addl | CA 10.23% | Net after withholding |
|---|---|---|---|---|
| 100,000 dollars | 22,000 | 1,450 + 0 (under 200K single) | 10,230 | 66,320 dollars |
| 250,000 dollars | 55,000 | 3,625 + 2,250 | 25,575 | 163,550 dollars |
| 500,000 dollars | 110,000 | 7,250 + 4,500 | 51,150 | 327,100 dollars |
| 1,000,000 dollars | 220,000 | 14,500 + 9,000 | 102,300 | 654,200 dollars |
| 1,500,000 dollars | 220,000 + 185,000 = 405,000 | 21,750 + 13,500 | 153,450 | 906,300 dollars |
Numbers reflect statutory withholding only. True liability at filing typically lands 8 to 15 percent higher for high earners because the 22 percent supplemental default sits below most marginal brackets. Plan estimated payments accordingly.
Common pitfalls
- Underwithholding shortfall. The 22 percent federal default loses 10 to 15 cents on the dollar for anyone in the 32, 35, or 37 percent brackets. Make Q3 or Q4 estimated payments via Form 1040-ES or boost W-4 line 4(c) to avoid the IRC Section 6654 safe-harbor penalty.
- Holding the vested shares. RSU vest gives you a taxable cash-equivalent windfall. Holding equals buying your employer with after-tax money, doubling your single-stock exposure on top of an already-correlated salary.
- ISO AMT trap. Exercising large ISO blocks without selling triggers AMT on the bargain element under IRC Section 56(b)(3). The 2026 AMT exemption is 88,100 dollars single, phase-out begins at 626,350 dollars; tranche exercises across calendar years to stay inside.
- NSO underwater exercise. If FMV is below strike, exercising creates zero gain and burns cash. The simulator flags this with an "underwater" verdict.
- Section 83(b) timing. Pre-IPO RSAs (not RSUs) can elect 83(b) within 30 days of grant to tax at the lower current FMV instead of vest FMV. Miss the deadline and you forfeit the election permanently.
- Wash sale on company stock. Selling vested RSUs at a loss while a new tranche vests within 30 days triggers IRS wash-sale disallowance under IRC Section 1091; defer the loss to the replacement basis.
Related tools and glossary
Frequently asked questions
Why does my RSU paystub show only 22 percent federal withholding when my marginal bracket is 37 percent?
The IRS treats RSU vest income as supplemental wages. Employers withhold a flat 22 percent federally on the first 1,000,000 dollars of supplemental income in the year and 37 percent on every dollar above that, per IRC Section 3402(g) and Publication 15. If your marginal bracket is 32, 35, or 37 percent, the 22 percent default leaves a shortfall you owe by April 15. Make a Q1 or Q2 estimated payment using Form 1040-ES to avoid the IRC Section 6654 underpayment penalty.
How much will I actually keep on a 250,000 dollar RSU vest in California in 2026?
On a 250,000 dollar vest with statutory withholding: federal supplemental 22 percent = 55,000 dollars; California supplemental 10.23 percent = 25,575 dollars; Social Security 6.2 percent up to the 2026 wage base of 176,100 dollars (max 10,918 dollars total if not already met); Medicare 1.45 percent = 3,625 dollars; Additional Medicare 0.9 percent on wages above 200,000 dollars single. Net after standard withholding is roughly 154,000 to 158,000 dollars, but actual tax owed at filing is often closer to 40 to 45 percent for high earners.
Should I sell RSUs at vest or hold them?
Mathematically, holding vested RSUs is identical to receiving a cash bonus and using it to buy your employer's stock. You are already taxed on the FMV at vest as ordinary income, and any further gain is just capital gains. Most advisors recommend immediate sale to diversify away from single-stock concentration risk, especially because your salary already comes from the same company. Holding for one year past vest converts further appreciation to long-term capital gains (0, 15, or 20 percent in 2026 brackets), which can be worthwhile only if you also have a thesis on the stock.
What is the AMT trap on ISO exercise and how do I avoid it?
Exercising Incentive Stock Options (ISOs) without selling triggers an Alternative Minimum Tax preference item equal to the bargain element (FMV minus strike) under IRC Section 56(b)(3). The 2026 AMT exemption is 88,100 dollars single (phase-out starts at 626,350 dollars) and 137,000 dollars joint. Large ISO exercises can push your AMT above regular tax. Common mitigations: exercise in January then sell the same calendar year if the stock drops (disqualifying disposition), or exercise small tranches each year to stay under the exemption.
Sources
- IRS Publication 15 (Circular E) (2026) Employer's Tax Guide - Section 7, supplemental wages, 22 percent and 37 percent rates.
- IRS Revenue Procedure 2024-40 - 2026 inflation adjustments: AMT exemption, capital gains brackets, standard deduction.
- Social Security Administration (2025) Contribution and Benefit Base - 2026 OASDI wage base set at 176,100 dollars.
- California Franchise Tax Board (2026) Publication 1031 - 10.23 percent state supplemental withholding rate on stock options and bonuses.
- IRC Section 83(b), Section 421 (ISOs), Section 422, Section 56(b)(3) (AMT preference), Section 3402(g) (supplemental withholding).