RSU Tax Withholding & Underpayment Penalty Calculator

What this calculator does

This calculator is for employees receiving Restricted Stock Units (RSUs). When RSUs vest, their value is wages and the employer withholds tax, often at the flat 22% supplemental rate, which can be lower than the rate at which the vest is actually taxed. This tool calculates the shortfall between what your employer automatically withholds and the federal tax the vest actually adds, helping you estimate potential IRS Form 2210 underpayment penalties so you can take proactive measures like adjusting your W-4 or making estimated payments. If you also hold ISOs, see our ISO vs NSO Stock Options AMT Calculator to model alternative minimum tax scenarios.

How the math works

The computation follows federal guidelines for supplemental wages, as outlined in IRS Publication 15 (Circular E). By default, employers are required to withhold a flat 22% for federal income tax on supplemental wages up to $1 million.

The calculator subtracts the 2026 standard deduction ($16,100 single, $32,200 married filing jointly) and runs your income through the 2026 federal brackets published in IRS release IR-2025-103. The federal tax on the RSUs is the tax on salary plus vest minus the tax on salary alone, so any part of the vest that falls in a lower bracket is taxed at that lower rate. Withholding is 22% of the vest (37% on any amount above $1 million). The shortfall is the federal tax on the vest minus that withholding; state tax on the vest is assumed to be withheld at your selected rate, which is shown in the true marginal rate but adds no gap. The penalty estimate applies the $1,000 threshold and the 90% current-year test, assumes your salary withholding covers the tax on your salary, spreads the underpayment evenly over the four 2026 installments (withholding is treated as paid in equal amounts on each due date), and charges IRS underpayment interest of 6% for the second quarter of 2026 and 7% for the third and fourth quarters through April 15, 2027. The first-quarter 2027 rate was not yet announced, so the 7% rate is carried forward. The prior-year safe harbor is not modeled.

Worked example

Let's walk through a concrete scenario for a single filer in California during the 2026 tax year:

• Inputs: A base salary of $180,000 and an annual vesting RSU value of $120,000. Filing status is Single, and the state tax rate is 9.3% (California).
• True Marginal Rate: The combined income is $300,000. After the $16,100 standard deduction, taxable income is $283,900, which is above $256,225 and in the 35% federal bracket. Adding the 9.3% state tax results in a true marginal tax rate of 44.3%.
• Federal Tax on the RSUs: Federal tax on $283,900 is $68,134.25 and on the salary alone ($163,900 taxable) is $31,934.00, so the vest adds $36,200.25, an effective 30.2%. Part of the vest is taxed at 24% and 32% before the rest reaches 35%.
• Actual Withheld: The employer withholds 22% federal, or $26,400. State tax at 9.3% is assumed withheld at the same rate, so it adds no gap.
• Tax Shortfall: $36,200.25 minus $26,400 is a federal shortfall of $9,800.25.
• Penalty: The 90% current-year requirement is $61,320.83 (90% of $68,134.25), while $58,334.00 is paid through withholding, an underpayment of $2,986.83. Spread over the four 2026 installments and charged IRS underpayment interest until April 15, 2027, the estimated penalty is $137.15.

How the shortfall grows with the vest and the salary

The 22% rate is the same for every vest, but the tax a vest actually adds depends on where it lands on top of your salary. The table holds the default $180,000 salary, single filing and 22% withholding, and changes the vest size. The last rows hold the vest at $120,000 and change the salary or filing status.

The shortfall grows faster than the vest because each additional dollar lands in a higher bracket while withholding stays at 22%. A small vest on a modest salary is withheld close to correctly; a large vest on a high salary can leave a third of the tax unpaid. Filing status matters as much as size: the joint brackets are roughly twice as wide, so the same $300,000 of income leaves a married couple only $1,128 short. The penalty column stays at zero in several rows even with a shortfall, because the 90% test is measured against the whole year's tax, not just the tax on the vest.

What the withholding rules allow, and the ways to close the gap

IRS Publication 15 treats vested RSUs as supplemental wages. When supplemental wages for the year are $1 million or less and are paid separately from regular pay, the employer may withhold a flat 22%, with no other percentage allowed for that method, or may instead use the aggregate method, which combines the payment with regular wages and withholds as if it were one paycheck. The part of an employee's supplemental wages above $1 million in a year must be withheld at 37%, regardless of the employee's Form W-4. The calculator's 37% option is therefore a what-if for comparison, not an election most employees can make on a vest under $1 million.

The tests come from IRS Publication 505. Its own 2026 example shows why the prior-year test is often the easier one after a large vest: a taxpayer with $180,000 of 2025 AGI, $42,581 of 2025 tax and $71,253 of expected 2026 tax needs to pay only $46,839, which is 110% of the prior year, instead of $64,128 under the 90% test. This calculator models only the 90% current-year test, so if last year's tax was much lower than this year's, your actual penalty may be zero even where the estimate shows one. Because withholding is treated as paid evenly, raising W-4 withholding on the remaining paychecks of the year can cover a shortfall discovered in the fall, while an estimated payment made late only counts from the date it is paid.

Frequently Asked Questions