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EquityDue

See the tax bill hiding in your RSUs before it lands.

Why 22% RSU withholding leaves a balance due

Payroll withheld a flat supplemental rate. Your Form 1040 uses brackets. The difference is not a mystery — it is a unit conversion problem.

Two different rates

Withholding is an installment system. Tax liability is an annual computation. When vest income is large and withheld at 22% while your ordinary marginal rate is 32% or 35%, the installment is short by design unless you sell extra shares or pay estimates.

State stacking

California’s supplemental rate on bonuses/equity and New York’s high flat supplemental rate are first-class inputs. EquityDue publishes a state table and wires it into the gap calculator so you are not stuck with federal-only blogs.

What the gap number is for

It estimates how many dollars of federal income tax were not withheld relative to a flat marginal assumption. It is not a full tax return. Use it to size sell-to-cover or quarterly payments, then confirm with a professional if the dollars are material.

General information, not personalized advice.

Common questions

Why do employers use 22%?
IRS supplemental wage withholding rules allow a flat rate on bonuses and many RSU vests under the $1M threshold — commonly 22% for federal income tax.
Is 22% my tax rate?
No. Your marginal ordinary rate on the return can be higher (or lower). The flat rate is a payroll convenience.
What about state tax?
States publish their own supplemental rates (for example California 10.23% on certain equity). They stack on top of federal withholding.
Does this include FICA?
Social Security and Medicare are separate. The gap tool on this site isolates income-tax withholding math.
Is this tax advice?
No. Educational arithmetic.
Why 22% RSU Withholding Leaves a Balance Due by EquityDue ↗