6 Tax Moves Tech Employees With RSUs Should Make Before December
Sam's List Editorial | 2026-06-23
6 Tax Moves Tech Employees With RSUs Should Make Before December Here's the thing nobody tells you when the offer letter shows up with a big RSU grant: your employer is almost certainly under-withholding your taxes, and you won't find out until April. The RSU year-end tax moves below are how you fix that before the calendar closes the door. The reason is mechanical. RSUs are treated as supplemental wages, and federal supplemental withholding defaults to a flat 22% (it jumps to 37% only on the portion of supplemental wages above $1 million in a year, per IRS Publication 15). But if your total income lands you in the 35% or 37% bracket — which a senior engineer at a public tech company often does — that 22% withheld is roughly 13 to 15 cents on the dollar short. On a $200,000 vest, that's a five-figure surprise. These are the RSU year-end tax moves that turn that April surprise into a December decision you actually control. Make them before the calendar flips and the options are still open. Move 1: The RSU year-end tax move that starts everything — run the real tax on your vest RSU income is ordinary wages at vest under IRC §83 — taxed the moment the shares deliver, whether you sell or not. The dollar value that hits your W-2 is the fair market value on the vesting date. So do the math your paystub won't. Add your salary, your vested RSU value, any bonus, and your spouse's income. Find your vetted marginal rate. If it's 32%, 35%, or 37%, the flat 22% withheld on the RSU portion is not enough — full stop. The gap: $150,000 vests, withholding takes 22% ($33,000), but you're in the 37% bracket. Your real federal tax on that slice is about $55,500. You're roughly $22,500 short before you've touched state tax. Knowing the number is the entire game. Everything below is how you close it. Move 2: Cover the RSU withholding shortfall before year-end, or the IRS adds a penalty A big vest doesn't just create a tax bill. It can create an underpayment penalty — the IRS charges interest when you haven't paid in enough during the year through withholding or estimated payments. You generally dodge the penalty by hitting a safe harbor: pay in at least 90% of this year's tax, or 110% of last year's tax if your prior-year adjusted gross income topped $150,000 (IRC §6654). A surprise vest can blow past what last year's number protects. Two clean fixes, both before December 31: Bump your W-4 withholding on your remaining paychecks. Withholding is treated as paid evenly across the year, so a late-year increase can retroactively patch earlier quarters — a quirk an estimated payment...
