RSU (restricted stock unit).

In plain English

An RSU grant is a promise of shares, not shares themselves. As each vesting date hits, that batch of shares becomes yours, and its market value that day is taxed exactly like salary: it lands in your W-2, with withholding usually handled by selling or holding back some shares. After vesting you simply own stock; selling later creates a capital gain or loss measured from the vest-date price.

01Why it matters

RSUs are how a growing share of mid-career compensation gets paid, and the two classic mistakes (double-counting the income tax, and unintentionally concentrating wealth in the employer's stock) both come from not knowing the vest-date tax mechanics.

02The math, step by step

400 RSUs vest when the stock is $50: $20,000 of W-2 income, with perhaps 30% withheld via shares sold. Your cost basis on the remaining shares is $50. Sell at $58 a year later: only the $8 per share is a (long-term) capital gain. The $50 was already taxed.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.