Equity Compensation
RSU & ISO Stock-Compensation Tax Calculator
Two things that catch people out: RSU vests are often under-withheld at the flat 22% supplemental rate, and nobody warns you about AMT on ISO exercises. Check both below.
How much will I owe on my RSU vest beyond what was withheld?
At your marginal rate of 32.0%, the IRS actually charges roughly $12,970 on this $50,000 vest. At the flat supplemental rate your employer would withhold about $11,000 (most employers use it; some use the aggregate method, which can differ), so you'll owe an extra $1,970 at filing.
- Most employers withhold at the flat 22% supplemental rate (37% over $1M); some use the aggregate method, which can differ. Supplemental wages over $1,000,000 in a calendar year (all bonuses and vests combined, including companies under common control) must be withheld at 37%.
- Your 2026 marginal bracket is 32.0%, which controls the true federal tax on the vest.
- FICA at vest: 6.2% Social Security up to the $184,500 wage base, 1.45% Medicare on all wages, plus 0.9% Additional Medicare above the filing-status threshold.
Source:IRS Pub 525 & Form 6251
2025 = return filed in 2026. 2026 uses Rev. Proc. 2025-32 brackets and OBBBA §70107 AMT phase-out.
RSU vest details
Selling ISO shares — qualifying vs disqualifying
A qualifying disposition requires holding ISO shares more than 2 years from grant AND more than 1 year from exercise. The full gain is taxed as long-term capital gain. Sell earlier and it becomes a disqualifying disposition: your gain becomes ordinary W-2 income up to the bargain element at exercise, any gain above that is capital gain, and a sale at a loss gives a capital loss and no ordinary income (Pub 525). A sale in the same year as the exercise also removes the AMT adjustment. Model your specific sale with our Capital Gains Calculator.
Withholding gap
Extra federal tax you'll owe at filing beyond the flat-rate withholding estimate
Estimate: most employers withhold at the flat 22% supplemental rate (37% over $1M); some use the aggregate method, which can differ. Enter the amount from your pay stub to replace it.
How this calculator works
RSUs: The full FMV × shares at vest is ordinary W-2 income (IRS Pub 525). Most employers withhold at the flat 22% supplemental rate (37% over $1M); some use the aggregate method, which can differ. The 37% rate is mandatory on supplemental wages above $1M in a year (Treas. Reg. §31.3402(g)-1). We estimate withholding at the flat rate unless you enter the amount from your pay stub. If your true marginal bracket is higher than what was withheld, the difference lands as an April surprise.
ISOs: Regular tax says nothing is owed at exercise. Form 6251 disagrees — the bargain element (FMV − strike × shares) is an AMT preference. We compute AMTI as your taxable income plus the deductions AMT doesn't allow (the standard deduction, or an itemizer's state and local taxes, and the senior deduction) plus the bargain element, apply the year's exemption with phase-out (25% in 2025; 50% in 2026 per OBBBA §70107), and charge 26% / 28% to get the Tentative Minimum Tax. AMT owed = max(0, TMT − regular tax).
AMT crossover: We binary-search the largest bargain element where TMT still ≤ your regular tax. That's the tax-free ISO exercise budget for the year.
Sources & References
Primary references used for this content
Taxable and Nontaxable Income
Income types
View on irs.gov
Alternative Minimum Tax — Individuals (instructions)
AMT calculation and preferences
View on irs.gov
Additional Medicare Tax
0.9% Medicare surtax
View on irs.gov
2026 Tax Brackets and Adjustments
2026 inflation adjustments (incl. OBBBA changes)
View on irs.gov
2026 Social Security Wage Base ($184,500)
Social Security taxable maximum
View on ssa.gov
✓5 primary sources; links re-checked on a weekly rotation by the source watcher
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Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.