In plain terms
How the tax works
income is compensation, so it is generally subject to the same payroll taxes as your salary.
Social Security tax applies up to an annual wage base limit that changes each year; once you pass it, that piece stops for the year.
Medicare tax applies to wages without a wage-base cap, and an additional Medicare tax can apply at higher wage levels.
These payroll taxes are withheld alongside income tax, which is why the total taken from a is more than just the income-tax portion.
What to check on your end
- Your pay stub around the for Social Security and Medicare lines.
- Whether you already passed the Social Security wage base earlier in the year.
- Whether your wages are high enough for additional Medicare tax to appear.
- That FICA was applied at , not deferred to a sale.
- Whether two employers in one year over-withheld Social Security.
Common mistake
Example scenario (hypothetical)
Illustration only, not your tax situation.
When a CPA is worth it
- You had two employers and may have over-paid Social Security.
- You are unsure whether additional Medicare tax applies to you.
- Your timing interacts with the annual wage base.
- You see payroll tax on a you did not expect.
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.
RSU vest as ordinary wage income on Form W-2 and separate capital-gain treatment on later sale.
- IRS — U.S. taxation of stock-based compensation (RSU vesting and W-2 reporting)
Internal Revenue Service · Official
Describes RSU income at vest, W-2 reporting in boxes 1/3/5, and ordinary income treatment.
- 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.
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 FICA Wage Base Calculator
Model FICA on an RSU vest using official wage base and payroll rates — especially when salary already consumed part of the Social Security cap.
Related pages
- RSUs and Medicare / Additional Medicare Tax
Large RSU vests can push wages over thresholds where additional Medicare tax may apply.
- RSU Vest and Social Security Wage Base
RSU vest FMV is Social Security wages — late-year vests after a high salary often incur Medicare only, not an employer error.
- 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.
- RSUs on W-2: What to Look For
Your W-2 should reflect RSU vest income in wages — know which boxes to check before filing.
- Reading Your Pay Stub After an RSU Vest
Vest FMV adds to gross wages on the same pay stub as salary — supplemental withholding and FICA lines spike, but net pay alone does not prove your full-year tax is covered.
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.