Your grant is labeled performance RSUs or PSUs, tied to company metrics or personal goals. You want to know when tax happens, how payout shares differ from time-based RSUs, and what documents to save when performance vests finally deliver.
Start here
What you need before using this
- Grant agreement distinguishing time-based vs performance .
- Performance period dates and certification timeline from HR or equity portal.
- Actual share delivery confirmation with and shares delivered.
- Whether payout is 0%, partial, or over 100% of target based on metrics.
- for the year performance shares deliver.
PSU plan designs vary. Performance metrics and payout timing come from your grant, not generic RSU rules.
Why this happens
Companies grant performance stock units (PSUs) to tie equity pay to revenue, EPS, stock price hurdles, or individual goals. Until the compensation committee certifies results and shares deliver, you generally have no taxable wage income from those units.
Failed performance cycles may pay zero shares — no wages from that tranche, similar to forfeited time-based that never vested.
Overachievement may pay above target shares. Tax is on actual shares delivered times on delivery date, not on target grant value from years earlier.
Performance certification often lags fiscal year-end. A PSU earned for performance in year one may deliver and tax in year two when committee approves payout.
Employers use on PSU delivery payroll like time-based vests.
and net settlement work the same: full delivery is wages; withheld shares satisfy tax collection.
Clawback or malus provisions in some executive grants are contractual — separate from standard PSU tax timing at delivery.
Relative TSR PSUs and internal metric PSUs both tax at delivery once shares issue — plan labels do not change wage character.
Dividend equivalents on unvested PSUs may be taxable when paid — some plans pay cash dividends on unvested units; that income may appear separately from share delivery. Check your plan statements and detail.
Performance and time-based on one aggregate in Box 1 without separate labels.
Basis for later sale is delivery-date per share for each performance lot, same as time-based .
Proxy statement grant tables show executive PSU design — your personal grant agreement controls your payout.
Partial career on departure may prorate performance PSUs per plan — separation agreement language matters.
State tax follows wage sourcing on delivery date like time-based vests.
Estimated tax planning should include PSU delivery in the year certification happens, which may differ from the performance period year.
Executive PSUs may have TSR hurdles measured over three years while you leave mid-period — separation proration language determines delivery, not headline grant value.
Time-based and PSUs from the same annual grant can certify on different dates — two wage events in one month from one employer.
Brokerage statements after PSU delivery should show a new lot with acquisition date equal to delivery date for later Form 8949 sales.
Internal transfers between divisions usually do not reset PSU performance periods — same employer continues.
What to check
- Certification date vs share delivery date on confirmation.
- Shares delivered vs target at grant — actual times shares on .
- Supplemental rate on performance payout.
- Separate dividend equivalent payments on if any.
- share count on performance confirmation.
- Whether failed cycles show zero delivery with no tax.
- Multiple performance tranches in one year stacking income.
- Broker supplemental lot report labeling performance grant ID.
Budgeting tax from grant target value instead of delivery FMV
What to check in your documents
- PSU grant agreement and performance metrics exhibit.
- Committee certification or payout notice.
- Share delivery confirmation with .
- and pay stub for delivery payroll.
- Equity portal grant detail showing earned percentage.
PSU certified after fiscal year-end
Illustration only, not your tax situation.
Questions people ask
- Are performance RSUs taxed differently from time-based RSUs?
- Generally no at delivery. on the date shares deliver is wage income. Performance rules determine if shares deliver, not a different wage category.
- When do I pay tax on PSUs?
- When shares deliver after performance certification. Not at grant and not when metrics are measured if delivery happens later.
- What if performance PSUs pay zero?
- No delivery usually means no wage income from that tranche, like forfeited time-based units.
- Can PSUs deliver above 100% target?
- If your plan allows. Tax is on actual shares delivered times on delivery date.
- Why did PSU wages hit a different year than the performance period?
- Certification and delivery often follow fiscal year-end. reports wages in the calendar year shares deliver.
- Do PSUs use sell-to-cover?
- Many employers use the same methods as time-based . Check your delivery confirmation.
- What is my basis when I sell PSU shares?
- Generally delivery-date from the performance confirmation — same as time-based lots.
- Are dividend equivalents on unvested PSUs taxable?
- Cash dividend equivalents paid before delivery may be taxable wages when paid under many plans. Check and plan statements — rules vary by employer design.
- Executive PSU vs rank-and-file PSU tax?
- Same federal wage-at-delivery rule. Grant sizes and metrics differ; tax mechanics at delivery are the same.
- Failed PSU and time-based vest same year?
- Time-based shares may still deliver wages while performance tranche pays zero. Model each delivery separately.
- Where do PSU wages appear on the tax return?
- In Box 1 wages like time-based . Sales of delivered PSU shares later go on Form 8949 with delivery-date as basis.
- Can I use the RSU tax calculator for PSUs?
- Yes for planning — enter shares delivered and from your performance payout confirmation as you would for any .
When to get help from a tax pro
- Dividend equivalents and delivery wages in the same year from one grant.
- Clawback after delivery and repayment terms.
- Cross-border PSU plans with multiple countries.
- Departure mid-performance-period with prorated PSU language.
Related calculators
- RSU Tax Calculator
Model federal and state taxes on your RSU vest, compare withholding to estimated tax, and see what you may keep.
- RSU Withholding Gap Calculator
Focus on the gap between what your employer withholds on RSU vests and what you may owe when everything is reconciled.
- Annual RSU Income Estimator
Total your expected RSU ordinary income for the year. a starting point before running detailed tax estimates.
Related pages
- How RSUs Are Taxed
RSUs are usually taxed as wages when they vest, not when the grant is signed. This guide walks through the timeline in plain terms.
- What Happens When RSUs Vest?
On vest day your employer typically reports wage income, withholds tax, and may sell shares. here is what to expect.
- RSU Tax Guide for Executives
Large single vests deserve proactive withholding and estimated payment planning. surprises are avoidable.
- RSU Refresh Grant Tax
Refresh RSUs tax like any RSU at vest FMV — the surprise is overlapping vest streams from multiple grants in one 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.
Performance RSU wage income at share delivery after certification.
- IRS Publication 525 — Taxable and Nontaxable Income
Internal Revenue Service · Official
Covers compensation income from stock-based pay, including restricted property under section 83.
- Equity Compensation — RSU taxation at vest and on sale
Charles Schwab (Workplace Financial Services) · Brokerage explainer
Plain-language explainer: RSU value at vest on W-2, FICA, withholding may not cover full tax, separate capital gains on sale.
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.