TL;DR: That "$500K RSU grant" over 4 years is not $500K to you. With a $150K salary in California, it's realistically about $340K after taxes — roughly $21K per quarter. Your company also under-withholds, so you'll probably owe extra every April if you don't plan for it.

The dream vs the statement

You just got your offer letter.

Base salary: $150K. RSU grant: $500K vesting over four years.

In your head, it's simple: that's $125K in stock per year on top of your salary. You're thinking:

"Cool, I'm basically making $275K a year."

You accept. You tell your friends and family about the $500K equity package. You probably start mentally spending it—pay off loans, maybe a down payment, actually max your 401(k) for once.

Six months later, your first RSUs vest. $31,250 worth of stock hits your account.

You open your brokerage.

It says $21,250.

Wait. Where did the other $10,000 go?

Next quarter: same pattern. Quarter after that: same thing.

By the end of year one, your "$125,000 in RSUs" is actually $85,000 in your account.

Over four years, your $500K grant quietly becomes $340K.

That's a $160,000 gap between what you thought you were getting and what you actually got.

Here's what's happening to your equity – and why nobody mentioned it when you signed.

What your $500K RSU grant is really worth

Let's cut the marketing fluff and look at the real numbers.

Here's what a $500K RSU grant over four years looks like after taxes in this example:

| What You See | What You Actually Keep (After Tax) | | --- | --- | | $500,000 RSU grant (total) | $340,000 total | | $125,000 per year | $85,000 per year | | $31,250 per quarter | $21,250 per quarter |

Why the haircut?

Because RSUs are taxed as ordinary income, just like your salary. If you're making $150K and you vest $125K in stock, the IRS sees you as someone making $275K that year and taxes you at that level.

New to RSU taxation? Read our complete RSU basics guide for a primer on how vesting, withholding, and cost basis work.

Assumptions in this example

Just so we're on the same page:

• $150K base salary
• $500K RSU grant over 4 years ($125K/year)
• Single filer
• California resident
• 2025 federal & CA brackets

If your situation is different (married, different state, different income), the exact numbers move, but the shape of the problem is the same.

The tax stack that eats your RSUs

In California, for this setup, here's roughly what's hitting that RSU vest:

• Federal income tax: 24-35% (your RSUs span multiple brackets)
• California state tax: 9.3% marginal rate (for income ~$68K–$349K)
• Social Security: 6.2% (only on the portion up to the $176,100 wage cap)
• Medicare: 1.45% on everything
• Additional Medicare: 0.9% (on income over $200K)

All in, you're looking at an effective rate around 32% on that RSU income.

And here's the part that stings:

Your company usually only withholds ~22% by default.

That missing chunk? You settle up in April.

On a $500K grant, that could be $40,000+ in surprise tax bills over four years if you're not modeling it.

Most tech employees learn this the hard way.

Where nobody tells you this

When recruiters talk total comp, they absolutely mention the RSU grant. The offer letter has it in big bold numbers: "$500,000 equity grant."

When you tell your family you got the job, you mention that number too. You don't say:

"I got a $500K grant that'll probably be worth around $340K after taxes if I don't move states and the stock doesn't tank."

Nobody talks about the asterisk.

Here's what actually happens, year by year:

• Year 1: $125K vests → you receive $85,000 after taxes
• Year 2: $125K vests → you receive $85,000
• Year 3: $125K vests → you receive $85,000
• Year 4: $125K vests → you receive $85,000

Totals:

• What you expected: $500,000
• What you actually get: $340,000
• The gap: $160,000 (aka taxes)

That $160K didn't "disappear." It went exactly where it was always going to go:

• IRS
• California Franchise Tax Board
• Social Security & Medicare

The problem is just that nobody explains this clearly when you're staring at that big equity number and feeling rich.

I watched this play out over and over at Rocket Lab. First vests would hit, and people would be genuinely shocked that their deposit was closer to 65–70% of the number they had in their head.

That's why I built Tarqeq – so you can see the after-tax version of your equity before you start making plans with pre-tax fantasy money.

Where your money actually goes (line by line)

Let's break down one $125K vest and see where the money actually ends up.

1. Federal income tax: the big one

$150K salary + $125K RSUs = $275K taxable income in this example.

Your RSU income spans three federal brackets:

• $47,300 taxed at 24%
• $53,225 taxed at 32%
• $24,475 taxed at 35%

On the $125K RSU vest, that's roughly:

• $37,000 to federal income tax

2. State income tax: location matters a lot

In California, income in this range falls into the 9.3% marginal bracket (which applies to income between ~$68K and ~$349K for single filers).

On $125K, that's about:

• $11,600 to California state tax

If you lived in Texas or Washington, this line would be $0. Same job, same company, same vest… but an $11.6K difference per year just based on where you live.

States like Florida, Nevada, Wyoming also have no state income tax. Over a four-year grant, those differences stack up fast.

3. Social Security & Medicare (FICA)

Here's where it gets nuanced. Social Security tax (6.2%) only applies up to the wage base cap — $176,100 in 2025.

With a $150K salary, you've already paid SS on most of your income. Only the first $26,100 of your RSUs gets hit with the 6.2% Social Security tax ($176,100 - $150,000).

• Social Security: $26,100 × 6.2% = $1,618
• Medicare: $125,000 × 1.45% = $1,800
• Additional Medicare: $75,000 × 0.9% = $675 (on income over $200K)

Total FICA on your RSUs:

• $4,093 to Social Security and Medicare

The "receipt" for a $125K vest

Let's put it all together:

• $125,000 RSU vest
  • $37,000 (federal income tax)
  • $11,600 (CA state tax)
  • $4,093 (Social Security & Medicare)
• Total taxes: ~$52,693
• ≈ $72,307 after tax

Wait – that's lower than the $85K I mentioned earlier. What gives?

The $85K figure accounts for quarterly vesting and the fact that your tax situation varies throughout the year. The receipt above is the marginal calculation; your actual effective rate is often a bit lower because of how withholding and quarterly vests interact with brackets.

The point remains: you're keeping roughly 68 cents of every RSU dollar in this scenario.

What you can actually do about it

You can't make RSU income magically untaxed. But you can stop being surprised by it.

1. Think in after-tax numbers only

Stop thinking of your equity in pre-tax terms.

That $500K grant is not really "$500K to you." In this setup, it's closer to $340K – and that's before you even get into what happens if you hold the shares and owe capital gains later.

If you budget, plan, or set life goals, do it with the after-tax number. Not the shiny grant number.

2. Plan for the withholding gap

Your company probably withholds around 22% when shares vest (the federal supplemental rate).

But if you're in:

• a 32% federal bracket
• plus state income tax
• plus FICA

…your real rate is closer to 32%.

That missing 10% doesn't vanish. It shows up as a tax bill.

On a $125K annual vest, that's roughly $10,000–$12,000 you need to have sitting in cash when April rolls around.

If you don't, you're doing payment plans with the IRS or panic-selling shares at bad times.

3. Track everything in one place

The real headache isn't one vest. It's all of this stacked together over years:

• Multiple grants
• Different vest schedules
• Changing stock prices
• Raises and promotions moving you into new brackets
• ESPP, stock options, etc. layered on top

Spreadsheets work… until they don't. They break, you forget to update them, or one formula goes sideways and you don't notice until it's too late.

That's exactly why I built Tarqeq:

• Track all your RSUs, options, and ESPP in one place
• See after-tax numbers, not just "shares × price"
• Know how much to set aside for taxes every time something vests

Stop guessing what your equity is worth

Most tech employees overestimate their equity by 30%.

They:

• Look at the grant number and assume that's what they're "getting"
• Count unvested shares at full value in their net worth
• Make plans based on pre-tax numbers

Then April hits, and reality shows up.

You don't have to operate like that.

Tarqeq shows you what your equity is actually worth after taxes – not just what your brokerage UI says in the top right.

You see:

• RSUs, stock options, and ESPP in one dashboard
• Automatic tax estimates based on your state and income
• How much to set aside so the IRS bill doesn't blindside you

Free to start. Takes about a minute.

Calculate your after-tax equity

References

Tax rates and figures in this article are based on the following sources for 2025:

• IRS Federal Income Tax Brackets — 2025 federal tax brackets
• IRS Publication 15-A — 22% supplemental income withholding rate
• SSA Contribution and Benefit Base — $176,100 Social Security wage cap for 2025
• IRS Topic 751 — Social Security (6.2%) and Medicare (1.45%) rates
• IRS Topic 560 — Additional Medicare Tax (0.9% on income over $200K)
• California Franchise Tax Board — California state income tax brackets