Free RSU and equity compensation calculator from Fynvorax. Estimate after-tax value of RSUs, stock options, and ESPP under federal tax and holding assumptions.
Working at modern technology enterprises or fast-growing platforms usually shifts traditional salaries into high-leverage compensation designs featuring Restricted Stock Units (RSUs) or stock options. Navigating these requires looking beyond unit sizes and evaluating the immediate and lingering tax effects. When RSUs vest, the tax authority views them as regular cash income. The market value on that vesting morning is calculated as ordinary income and taxed up to the highest marginal rate, even if you do not sell a single share. For stock options, the mechanics are different. You hold the righ
RSUs represent a commitment to deliver a share at no cost once vesting requirements are met. Stock options give you the right to purchase shares at a specific discount (strike price), meaning you must pay cash to exercise them.
This is known as 'Sell-to-Cover'. Your company automatically liquidates a portion of your vesting shares (often 30%-45% depending on your ordinary tax bracket) to settle your immediate payroll income tax liability with the IRS.