Treat withholding as a prepayment
An employer’s supplemental-wage withholding method can differ from the final incremental tax on an RSU vest. The default federal rate below the supplemental threshold is 22%, while your vest may fall into a higher regular income-tax bracket.
Calculate the increment
The model computes regular federal tax before and after adding the vest to taxable income. This captures a vest crossing a bracket boundary instead of applying a single top rate to every dollar. Enter taxable income after deductions, not gross pay.
Watch the separate thresholds
The $1 million supplemental-wage threshold affects federal withholding. Social Security has a wage base. Additional Medicare withholding uses an employer threshold that can differ from final joint-return liability. These are different rules and need different inputs.
Use the reserve as an estimate
A positive gap means the modeled taxes exceed modeled withholding for this vest. It is not a complete estimated-tax-payment instruction or a full-year return. AMT, credits, other income, payroll details, and state rules can change the result.
Sources and further reading
This guide explains a tool and its assumptions. It is not personalized financial, tax, or legal advice.
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