RSU Supplemental Rates

22%. That's the federal supplemental withholding rate on your RSUs. If your actual tax bracket is higher than that, you already have a problem and you might not know it yet.

When RSUs vest, your employer withholds taxes at that 22% supplemental rate. For a lot of Bay Area tech employees, that rate is lower than your actual federal tax bracket. Which means come April, you owe the difference.

But California doesn't play by the same rules.

10.23%. That's California's supplemental wage withholding rate, which is what gets applied when your RSUs vest. For many Bay Area tech employees, that rate actually runs higher than their true CA tax liability. So while you're making a payment to the IRS, you might be getting a refund from the state at the same time.

Same income. Same vest event. A balance due federally and a refund from California.

This isn't a mistake. It's just how the math works. But it catches a lot of people off guard, especially if they're used to getting a refund everywhere.

If you've had RSUs vest this year and you're not sure where you stand, it's worth a quick review before year end. A little planning now is a lot better than a surprise in April.