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Estimate vest tax

Is RSU vest income ordinary income or capital gains?

Most RSU tax at vest is ordinary income on your W-2; only price changes after vest may create capital gain or loss.

Rates and rules change. Check the tax year and last-reviewed date on each page, then confirm against IRS or state guidance before you file.

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The itself is usually ordinary wage income. Only price movement after , when you sell, may produce or loss. Those later gains can be short- or long-term depending on how long you held the shares after .

Why this happens

rates apply to compensation: value is treated as pay you received in stock instead of cash.

rules apply when you sell an asset for more (or less) than your basis.

Your basis after is typically the , the amount already hit your .

Short-term (held one year or less after ) are taxed at rates. Long-term rates apply after more than one year, but the income itself was still ordinary.

What to check

  • Box 1, includes wages.
  • Schedule D / Form 8949, or loss on sales after .
  • Holding period, count from , not .
  • Basis adjustments if shows $0.
  • State tax treatment, some states align with federal; verify your state rules.

Common mistake

Calling the entire sale '' because it appears on . The first layer of tax was usually at as wages. The should mostly reflect the delta after , unless basis was wrong.

Example scenario (hypothetical)

Illustration only, not your tax situation.

Morgan vests $20,000 of in April (): Morgan keeps the shares. In April next year, Morgan sells for $24,000. The $20,000 was taxed as wages in year one. In year two, Morgan may have about $4,000 of long-term on the sale, not $24,000 of again.

When to get help from a tax pro

  • You sold below price and want to understand capital loss limits against .
  • You donated shares to charity.
  • You are subject to net investment income tax or and want to see how pieces fit together.
  • You have and incentive stock options in the same year.

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Related pages

Sources and notes

Vest value taxed as wages; post-vest price change taxed as capital gain or loss.

For learning, not filing

Grants, employers, and states all differ. Use your own documents and a qualified tax professional before you make decisions from this guide.