What is the RSU withholding rate?

Employers often use the IRS optional flat supplemental rate on RSU vests (commonly 22% federal on the income-tax portion under Publication 15). State withholding may use a separate flat or table rate. That is withholding, not your final marginal tax rate.

Can I ask my employer to withhold more on the next vest?

Some stock plans allow extra withholding elections; others do not. Many people increase W-4 withholding on salary or make estimated payments instead. Check your plan administrator's vest settings.

Does the 22% rate change every year?

Publication 15 sets the optional flat supplemental rate. Employers choose whether to use it and may use different methods above certain thresholds. Verify the rate on your vest notice rather than assuming it stays constant.

Why is there still FICA if 22% was already taken?

Social Security and Medicare apply to RSU vest income as wages. The 22% line is federal income tax withholding only, not payroll tax.

I'm in California — is 22% enough with state tax too?

California taxes RSU vest income as ordinary wages. Combined federal flat withholding plus California withholding still may not equal your marginal rate if you are a high earner.

RSU Withholding Rate Explained | Why Not 22% Only?

You saw 22% withheld on a vest notice and want to know whether that is your full tax — or just payroll’s flat supplemental rate.

In plain terms

Employers may use the IRS flat rate (22% federal on under $1 million in a calendar year, per Publication 15) for vests. That rate is a shortcut, not a promise that 22% is all you owe.

Withholding vs actual tax owed

Withholding is what is collected during the year. Your return reconciles the rest.

Topic	Withholding	Actual tax owed
What it is	Payments sent to IRS/states on your behalf	Final tax after return is completed
RSU vests	Often flat supplemental rate (e.g. Pub 15 method)	Based on total annual income and brackets
Timing	At vest or on paycheck	Determined when you file
If too low	You may owe at filing	Balance due plus possible estimated-tax penalties
If too high	Refund after filing	Refund is returning over-withheld amounts

Use the IRS Tax Withholding Estimator or adjust W-4 / estimated payments if vests are large relative to salary.

Gather before you start

confirmation or pay stub showing amounts.
Rough estimate of your total annual income including the .
Last year's tax return or bracket estimate.
State of residence on .

Withholding rules come from IRS Publication 15; your employer's payroll system may differ slightly.

How the tax works

Payroll needs a simple rate for bonuses and equity vests outside regular paycheck cycles.

Publication 15 allows optional flat supplemental rates on many payments.

Your actual tax depends on total annual income, deductions, credits, and filing status.

State and payroll taxes are separate lines and may not match your full-year liability.

What to check on your end

Federal supplemental rate used vs. your marginal federal bracket.
State rate on the .
FICA withheld on the (not part of the 22% income-tax line).
Other large income in the same year stacking into higher brackets.
Whether you already hit the Social Security wage base.

Treating 22% as your tax rate

High earners in the 32% or 37% federal brackets plus state tax often need to set aside more than the flat . The surprise shows up at filing, not because payroll made an error, but because supplemental rates are not calibrated to your full-year picture.

What to pull from your files

notice: federal, state, and FICA withheld.
Pay stub line vs. regular salary .
W-4 on file (marital status, extra ).
Year-to-date wages before the on your last pay stub.

Example scenario (hypothetical)

Illustration only, not your tax situation.

Sam vests $30,000 of . The employer withholds 22% federal ($6,600) plus 10% state ($3,000). Sam's rough marginal combined rate on the might be closer to 40% when federal, state, and payroll taxes are counted, leaving a gap of several thousand dollars unless Sam adjusts elsewhere.

Questions people ask

What is the RSU withholding rate?: Employers often use the IRS optional flat supplemental rate on vests (commonly 22% federal on the income-tax portion under Publication 15). State may use a separate flat or table rate. That is , not your final .
Can I ask my employer to withhold more on the next vest?: Some stock plans allow extra elections; others do not. Many people increase W-4 on salary or make estimated payments instead. Check your plan administrator's settings.
Does the 22% rate change every year?: Publication 15 sets the optional flat supplemental rate. Employers choose whether to use it and may use different methods above certain thresholds. Verify the rate on your notice rather than assuming it stays constant.
Why is there still FICA if 22% was already taken?: Social Security and Medicare apply to income as wages. The 22% line is federal income tax only, not payroll tax.
I'm in California — is 22% enough with state tax too?: California taxes income as ordinary wages. Combined federal flat plus California still may not equal your if you are a high earner.

When a CPA is worth it

You had a large plus significant in the same year.
You owe underpayment penalties and want a plan.
You are deciding between W-4 changes and quarterly estimated payments.
Your employer withheld 22% but you are subject to additional Medicare tax.

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.

22% is a federal supplemental withholding option under Pub 15, not final tax owed.

IRS Publication 15 (Circular E) — Supplemental wages
Internal Revenue Service · Official
Section 7 describes supplemental wage withholding, including the optional 22% flat rate and 37% rate above $1 million of supplemental wages in a calendar year.
IRS Tax Withholding Estimator
Internal Revenue Service · Official
Tool to estimate whether paycheck withholding (including supplemental events) will cover annual tax liability.

Related calculators

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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Why did my employer withhold 22% on my RSU vest?