How are RSUs taxed when they vest?
RSUs are taxed as ordinary wage income the moment they vest, not when you sell. On the vesting date, the fair market value of the shares is added to your W-2 box 1 and taxed like a bonus – subject to federal income tax, Social Security, Medicare, and state tax. That vesting value also becomes your cost basis, so future gains or losses are measured from there. If you sell immediately, there's almost no additional gain. If you hold and the stock rises, the appreciation is a separate capital gain taxed when you sell. A common surprise: the income hits your return even though you may never have sold a share. Model the wage bump with wealthserene.com/tools/rsu-espp-calculator so you aren't blindsided in April.
Educational disclaimer. Everything on WealthSerene.com is educational and is not investment advice. Projections and calculations are illustrative; actual results depend on market conditions, your situation and factors outside this tool’s scope. For a decision specific to your situation, consult a qualified financial professional. View full disclosures