How much can I expect to take home in equity after taxes?
Trying to budget for housing and realizing I need to potentially sell a substantial amount to afford what I want. If I have roughly $100k RSU every year, how much can I expect to take home? Assuming I sell right away after vest, do I get taxed on that? Would a good rule of thumb be 35% marginal tax rate, keeping me take home $65k every year? TC $395K L5 after vest
The amount of taxes you owe on your rsus on vest depends in your financial situation. Depends on your withholding rate, if you are selling stocks on vest to cover income tax or not. If not withholding the right amount you will owe at end of quarter / at tax season. Since you sell directly on vest no capital gains taxes are applicable.
Capital gains or losses may apply because there are typically a few days between vest and being able to sell. Usually the gains are trivial; for some companies the losses can be significant. The withholding rate (in the US) on RSUs is the fixed bonus rate, which can be anywhere from too high to wildly too low depending on your actual bracket. You can withhold extra on regular paychecks to cover the excess, but in general it is better to just pay the taxes with sold stock.
Always do approx calculation of 48% deduction if in CA Palo Alto or anywhere federal tax is mandatory
If you’re planning for mortgage payments, apply a discount for stock depreciation.
If you're in California, it's 45% or higher
Compute taxes on your tc, then apply that effective tax rate to your rsu and that is how much you can expect to take home. Note that that number is different from withholding
Calc makes sense thanks! Why is it necessarily different from withholding? Couldn't I apply the same rate to withhold taxes?
Most companies (possibly all?) withhold based on the fixed bonus rate. You can and should use that calculation to figure out if you need to sell some extra stock to cover quarterly taxes.
Roughly 45%
I use a rough estimate of 60/40 at the time of vesting. You keep 60%, but most likely will owe another 5% at the time you pay taxes, slightly more if your spouse works and you file jointly. That's for CA with 0 deductions in W-4 form.
I am in hcol and I get to keep around 55%
50%
35% sounds about right