Equity compensation tax calculator

The four moments that create a tax event

1. Grant

Most grants create no tax. The exception is restricted stock: if you receive shares subject to vesting, section 83 treats the value at vesting as ordinary income unless you file an 83(b) election within 30 days of the transfer and pay tax on the (usually tiny) spread at grant. Filing starts the capital-gain clock immediately; not filing pushes the entire vest-date value into ordinary income.

2. Vest

RSUs are taxed when shares are delivered. The closing price on the vest date is ordinary wage income, it appears in box 1 of your W-2, and it is subject to Social Security and Medicare like salary. Your basis becomes that same price, so selling immediately produces almost no capital gain.

3. Exercise

Non-qualified options are taxed on the spread between strike and fair market value on the exercise date — ordinary income, no deferral. Incentive stock options are the opposite: nothing for regular tax, but the same spread is added to alternative minimum taxable income, which can produce an AMT bill on a gain you have not realized. The AMT crossover calculator finds the exercise size where that starts.

4. Sale

Selling creates capital gain or loss measured from your basis: the vest price for RSUs, the exercise-date value for NSOs, the strike for a qualifying ISO disposition. Hold longer than a year past that basis date and the gain is long-term. For section 1202 stock, the holding period also controls how much of the gain is excluded — 50% at three years, 75% at four, 100% at five for stock acquired after July 4, 2025.

Why the number on your payslip is not the number you owe

Employers withhold a flat 22% on stock income because the IRS classifies it as supplemental wages, not because 22% is your rate. A single filer with $120,000 of salary who vests $40,000 of stock pays about $9,564 of federal tax on that vest — an effective 23.9% — while $8,800 is withheld. The $764 difference is due in April, and it grows with your bracket: at 35% the same vest is short by more than $5,000.

That gap is the reason every calculator here shows intermediate rows: the marginal rate applied, the amount withheld, the basis, the exemption, the exclusion cap. A single total hides the mechanism that produced it.

Frequently asked

Is there one tax rate for equity compensation?

No. The rate depends on the instrument and on the moment the tax event happens. RSUs and NSOs are ordinary income on the value at vest or exercise, taxed at your marginal rate even though only 22% was withheld. ISOs create no regular tax at exercise but add the bargain element to alternative minimum taxable income. QSBS gain can be excluded from federal income tax entirely if the holding period and the issuer tests are met.

Why does my employer withhold only 22%?

Because the IRS classifies stock income as supplemental wages, and the flat statutory rate is 22% up to $1 million paid to the same employee in a calendar year (37% above that). It is a withholding rule, not a bracket. If your marginal rate is 32%, 35% or 37%, the difference is due with your return.

Which calculator should I start with?

If shares vest, start with the RSU tax calculator. If you hold options, use the ISO or NSO calculator depending on the grant type, and the exercise-cost calculator if you are funding a purchase. If you were granted restricted stock as a founder, start with the 83(b) election calculator.

Do these calculators include state tax?

Federal tax is computed exactly for tax year 2026. Each tool takes an optional flat state rate, because state treatment of equity pay varies too much to model per state reliably.

Sources. Brackets, standard deduction, AMT exemptions and capital-gain thresholds: IRS Rev. Proc. 2025-32. Supplemental withholding: IRS Publication 15. Section 83(b): IRC section 83(b) and Treas. Reg. 1.83-2. Section 1202 tiers: 26 U.S.C. 1202 as amended by Pub. L. 119-21. Educational estimates for tax year 2026; not tax advice.