RSU, ISO & Stock Option Tax Calculator
Model your tax hit on RSU vesting, calculate Alternative Minimum Tax (AMT) on ISO exercises, and project capital gains taxes upon final share sale.
2Taxpayer Filing Status & Brackets
Tax Liability & Net Equity Take-Home
Payroll Shock Alert: Your employer only withholds 22% federal supplemental tax by statute. Because your true bracket is higher, you will owe a substantial tax gap at tax time! Plan estimated payments to avoid IRS penalties.
How it works
1
Select your equity vehicle (RSUs, ISOs, or NSOs).
2
Enter your share count, strike price (for options), and Fair Market Value (FMV) at vesting or exercise.
3
Input your anticipated future share sale price and holding period (> 1 year vs. ≤ 1 year).
4
Select your federal marginal income tax bracket and state of tax residency.
5
Examine your immediate tax burden, potential under-withholding shortfall, ISO AMT exposure, and net after-tax proceeds.
Frequently asked questions
How are RSUs taxed in the United States?
When RSUs vest, their Fair Market Value is treated as supplemental ordinary W-2 income subject to federal income tax, state income tax, Social Security (up to annual cap), and Medicare taxes. Most brokerage platforms automatically execute a 'sell-to-cover' transaction to withhold taxes on that day.
Why do RSUs frequently cause an under-withholding tax surprise?
IRS statutory rules mandate a flat 22% federal supplemental wage withholding for bonuses and RSUs under $1 million. However, tech earners are often in the 32%, 35%, or 37% marginal tax brackets. This leaves a 10% to 15% tax gap that must be paid at tax filing time, often triggering IRS underpayment penalty interest.
What is the Alternative Minimum Tax (AMT) trap with ISOs?
When exercising Incentive Stock Options (ISOs), no regular income tax is due. However, the spread between the exercise price and the Fair Market Value (FMV) is considered income under the AMT system. If your AMT exceeds your regular tax, you must pay the difference—even if you haven't sold the shares and have zero cash proceeds.
Can I recover the AMT paid on ISO exercises?
Yes. The AMT you pay on the paper spread creates a Minimum Tax Credit (tracked via IRS Form 8801). You can carry this credit forward indefinitely to reduce your regular income tax in future years when you ultimately dispose of the stock.
What makes an ISO disposition 'qualifying' vs 'disqualifying'?
A qualifying disposition requires you to hold the stock for at least 2 years from the date the options were granted AND at least 1 year from the date you exercised them. Meeting this rule entitles your entire profit (Sale Price minus Strike Price) to preferential Long-Term Capital Gains rates (15% or 20%), rather than higher ordinary wage rates.
Is this tool free?
Yes. The site is supported by ads, so you never pay or need to create an account.
Does it work on mobile?
Yes. The page adapts to your screen and does not require installing any app.