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RSU tax calculator

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. Content is reviewed for tax year 2026. Check the last-reviewed date and methodology on each page, then confirm against IRS or state guidance before you file.

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In plain terms

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 .

How the tax works

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 on your end

  • 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 a CPA is worth it

  • 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.

Sources and notes

Primary tax claims on this page are supported by the official and secondary sources below. Broker and software links describe reporting mechanics — confirm rules against IRS or state guidance.

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

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For learning, not filing

VestingTax.com is not a CPA firm or tax preparer. Grants, employers, and states all differ. Use the cited IRS and state sources above, your own documents, and a qualified tax professional before you make decisions from this guide.

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