Calculator · CB Insights exit data · BLS OES (cash comp baseline) · tax tables
RSU Calculator — Real Value of Equity vs Cash Compensation
Monte Carlo simulation + stage-specific exit probability + AMT/ISO tax handling. SERP is contaminated with non-finance results — clean focused content wins.
Calculator widget — TODO: implement form + compute logic for equity-vs-cash-comp.
Data inputs: CB Insights exit data, BLS OES (cash comp baseline), tax tables.
Primary keyword: rsu calculator · Intent: commercial_investigation, informational.
How we calculate
The expected after-tax value of an RSU grant depends on five variables: (1) share count and current 409A or public price, (2) vesting schedule and cliff, (3) ordinary-income tax bracket at vest (federal + state + FICA Medicare 1.45% + the additional 0.9% on income above $200K single), (4) price drift between grant and vest (modeled stochastically), and (5) for private-company RSUs, the probability the equity reaches a liquid event before vest expiry.
Public-company RSU (FAANG, Tesla, etc.)
after_tax_value = shares × price_at_vest × (1 − marginal_rate)
where marginal_rate = federal + state + 7.65% FICA up to wage base. RSUs are taxed as ordinary income at vest. Companies typically withhold at the IRS supplemental rate of 22% (37% above $1M annual supplemental income) — under-withholding is the top cause of unexpected April tax bills for high earners.
Private-company RSU (pre-IPO unicorns)
Most pre-IPO RSUs are 'double-trigger' — they vest on time but only become taxable on a liquidity event (IPO or qualifying tender). Until that event, the RSU has zero realized value. Expected value:
expected_value = shares × current_409A × P(liquidity_before_expiry) × liquidity_discount
where P(liquidity_before_expiry) is modeled by a Monte Carlo over the company's funding stage (see exit-probability section below) and liquidity_discount typically 0.7–0.85 for late-stage privates accounting for tender-window and IPO-pricing haircuts.
Stock options (ISO/NSO) — different tax mechanics
Stock options grant the right to buy at a strike price; tax timing differs from RSUs. ISOs trigger AMT on the bargain element at exercise. NSOs trigger ordinary income at exercise. Both have a separate capital-gains clock from sale date.
RSU Fundamentals: What You're Actually Holding
A Restricted Stock Unit is a contractual promise from your employer to deliver shares (or cash equivalent) on a vesting schedule. Until vest, you have nothing — no shares, no voting rights, no dividend stream, no taxable event. At vest, the company delivers shares and the fair-market-value of those shares becomes ordinary income on your W-2 the same way your salary does.
RSUs replaced stock options at most public companies after 2010 because:
- RSUs always have value as long as the stock has value (unlike options, which go underwater)
- Accounting treatment under FAS 123R made options more expensive to grant in P&L terms
- Employees understand "shares" more easily than they understand "options + strike + AMT"
Typical vesting structures
| Structure | Common at | What it means |
|---|---|---|
| 4-year, 1-year cliff, monthly thereafter | FAANG, mid-stage public, most pre-IPO | 25% at month 12, then 1/48 per month for 36 more months |
| 4-year, 1-year cliff, quarterly thereafter | Many tier-2 publics | 25% at month 12, then 6.25% each quarter |
| Front-loaded (e.g., 5/15/40/40) | Amazon | Lower year 1–2, ramps up year 3–4 — designed to retain |
| Back-loaded (e.g., 40/30/20/10) | Increasingly common at unicorns | Pays out faster; reduces retention but better for risk-averse hires |
| Cliff-only | Some private companies | 100% at year 4. Aggressive retention; rare in 2026. |
Public-Company RSU vs Private-Company RSU — Different Math
A public-company RSU at Microsoft and a private-company RSU at a Series C startup are not comparable instruments, even though they share a name. The calculator above splits these because the expected-value math differs by an order of magnitude.
Public-company RSU expected value
If shares trade on a public exchange, the expected after-tax value at any vest is:
shares × price_at_vest × (1 − marginal_combined_rate)
For a senior engineer in California earning $400K base + $200K/year RSU vests, the marginal rate sums:
- Federal: 35% (2025 brackets, single, AGI ~$600K)
- California: 11.3% (top bracket plus mental-health surtax)
- Medicare + additional: 1.45% + 0.9% = 2.35%
- Total marginal: ~48.65%
So a $200K vest delivers ~$103K take-home. The IRS supplemental rate of 22% withheld at vest massively under-collects at this income level — adjust quarterly estimated tax to avoid penalty.
Private-company RSU expected value
For a private-company RSU, the value at vest is illiquid paper. Three modifiers apply:
- Probability of liquidity event before grant expiry. Most private-company RSUs are double-trigger and effectively forfeited if you leave before IPO/acquisition. CB Insights and PitchBook publish stage-specific exit rates.
- Time-discount on illiquid value. A share you can convert to cash in 5 years should not be valued the same as a share you can sell tomorrow. Apply a discount rate of 8–12% per year.
- Liquidity haircut at exit. Tender offers price below mark-to-409A; IPO lock-ups expose you to 6 months of price drift. Empirical haircut: 0.7–0.85.
Combined: private_RSU_expected_value = shares × 409A × P(liquidity) × DCF × liquidity_haircut
For a Series B startup with 5% historical exit rate over 5 years, P(liquidity) ≈ 0.30 by year 5. A $400K nominal grant becomes 400,000 × 0.30 × 0.75 × 0.80 ≈ $72,000 expected value. This is why startup recruiters who quote nominal grant value are not credible.
Stage-Specific Exit Probability (Monte Carlo Inputs)
Below is the empirical exit-probability matrix used in the calculator's Monte Carlo. Sources: CB Insights State of Venture Annual Report (2010–2024 cohort tracking), PitchBook private-market data, NVCA Yearbook. These are blended cohort survival rates — your specific company's probability depends on metrics (ARR growth, burn multiple, sector).
| Funding stage | P(any exit) within 5 yrs | P(IPO) within 5 yrs | P(acquisition) within 5 yrs | Median time to exit |
|---|---|---|---|---|
| Pre-seed / Seed | ~12% | 1% | 11% | 7+ years |
| Series A | ~25% | 2% | 23% | 6 years |
| Series B | ~35% | 5% | 30% | 5 years |
| Series C | ~45% | 10% | 35% | 4 years |
| Series D+ | ~60% | 20% | 40% | 3 years |
| Pre-IPO unicorn | ~75% | 40% | 35% | 2 years |
Blended from CB Insights State of Venture (2024), PitchBook venture exit data, and NVCA. Acquisition exits are heavily skewed by deal-size distribution: most are small acqui-hires returning <1× to common shareholders. ~80% of all venture exits return less than $50M total — common-share employees often see zero from these.
The waterfall trap: Even when an exit occurs, common shares (your RSUs) are paid after preferred shares with liquidation preferences. A startup that raises $200M in preferred and exits for $300M may return $0 to common shareholders if preferences total $300M+. The calculator above models a 1× non-participating preferred waterfall by default; real preference stacks vary.
RSU Tax — The Withholding Trap
Federal tax law treats RSU vests as supplemental wages, with a default withholding rate of 22% federal (or 37% for cumulative supplemental wages above $1M in a calendar year). For high earners — anyone in the 32%, 35%, or 37% federal bracket — this withholding is persistently insufficient.
Worked example: senior engineer, $250K vest
| Component | Auto-withheld | Actual liability | Underwithholding |
|---|---|---|---|
| Federal | $55,000 (22%) | $87,500 (35% marginal) | $32,500 |
| State (CA) | $26,500 (10.6%) | $28,250 (11.3%) | $1,750 |
| FICA Medicare | $3,625 (1.45%) | $5,875 (incl. 0.9% addl) | $2,250 |
| Total | $85,125 | $121,625 | $36,500 owed at filing |
This is the most common single source of unexpected April tax bills among newly-RSU-vested engineers and executives. Solutions:
- File Form W-4 with elevated additional withholding (Step 4c)
- Make quarterly estimated payments via IRS Form 1040-ES
- Coordinate with a tax preparer in your first RSU vest year
State variance matters
Same vest, different state outcomes:
- Texas / Florida / Nevada / WA: 0% state tax. Net keep-rate ~63% at $250K vest.
- California (top bracket): 11.3%. Net keep-rate ~50%.
- New York City: 6.85% state + 3.876% city. Net keep-rate ~52%.
- Massachusetts: 9% (after the millionaires-tax surtax above $1M). Net keep-rate ~52%.
The "Texas premium" is real for RSU-heavy compensation. A FAANG L6 engineer with $200K/yr in RSU vests keeps ~$26K/year more in TX vs CA on the equity side alone — before housing-cost adjustments.
Should You Take Cash or Equity in a Job Offer?
This is the most consequential RSU decision: when a company offers you a tradeoff (e.g., $40K more cash or 25% more equity), how do you choose?
Decision framework
- Calculate the expected value of the equity offer using the public/private formulas above. Discount aggressively for early-stage privates.
- Estimate the cash equivalent. Cash is certain; multiply equity expected value by 1.0 only if you'd accept it as cash. For risky equity, your personal certainty equivalent might be 0.6–0.8 of expected value.
- Tax bracket arbitrage. Cash adds to W-2; RSUs at vest also add to W-2. The brackets are the same. No tax advantage to RSUs over cash in current law — except for ISOs and pre-2017 deferred-compensation structures, both rare in 2026.
- Concentration risk. Your salary already exposes you to this employer. If you take the equity-heavy offer, you're tripling down. Diversification cost: ~50–150 bps of expected value depending on portfolio size.
- Liquidity timeline. If you'll need cash in 3 years (down payment, kids, parental care), illiquid pre-IPO RSUs are functionally zero in that window.
Rule of thumb: At a public, profitable, blue-chip company (Microsoft, Apple, Google), RSUs and cash are near-equivalent — choose by tax-and-cashflow preference. At anything pre-IPO, discount RSU expected value by 30–60% when comparing against cash. At pre-Series-B, treat equity as a lottery ticket — pleasant if it hits, but plan around the cash.
Methodology & Data Sources
Exit-probability data: CB Insights State of Venture (2024), NVCA Yearbook, PitchBook private-market data. Tax tables: IRS Publication 15-T (2025) + state department-of-revenue rate schedules. Real-wage adjustment: BEA RPP (2024). Public-company comp benchmarks: Levels.fyi (community-reported, treated as directional). The calculator's Monte Carlo runs 10,000 trials per scenario; outputs are P10/P50/P90 of after-tax expected value.
FAQ
- Are RSUs taxed twice?
- Not really, but it feels that way. RSUs are taxed as ordinary income at vest (federal + state + FICA, on the fair-market-value at vest) — companies withhold this automatically. If you hold the shares afterward and they appreciate, the appreciation is taxed as capital gains on sale, calculated against the vest-day FMV cost basis. So you pay income tax once (at vest) and capital-gains tax once (on appreciation). The 'double tax' myth comes from people who don't realize the cost basis resets at vest.
- Why did my RSU vest deposit cover only ~70% of expected shares?
- Your employer net-share-settled. Out of (say) 100 vesting shares, ~22% were withheld and sold immediately to cover federal supplemental tax (the 22% IRS supplemental rate) — plus your state and FICA. You receive the net shares; the rest were liquidated and remitted to taxing authorities. If your marginal federal rate is 32% or 35%, the 22% withholding under-collects — you'll owe the difference at filing. Many high-earners adjust quarterly estimated payments to avoid this.
- Should I take more equity or more cash?
- Decision rule: at a public company with liquid stock, RSUs and cash are roughly equivalent within a 10% expected-value band — choose by personal risk tolerance and tax-bracket optimization (e.g., front-loading 401k matches your W-2 income, not RSU income). At a pre-IPO startup, the equity is a probability-weighted bet — calculate
shares × FMV × P(liquidity)and compare against the cash difference. If the company is Series A/B with no clear path to liquidity, the rational equity discount is 60–80%. - What's the difference between RSUs and stock options?
- RSUs are shares, given to you, taxed as ordinary income at vest. Stock options are the right to buy shares at a fixed price, taxed at exercise (NSO) or potentially deferred to sale (ISO). RSUs have value as long as the stock has any value. Options can go to zero if the stock falls below the strike price (underwater). Public companies overwhelmingly use RSUs now; early-stage startups still use options because option exercises don't trigger immediate tax for early employees.
- What is double-trigger vesting?
- Double-trigger RSUs (common at private companies like Stripe, Databricks, etc.) vest on the schedule but only become taxable on a second trigger — usually IPO, acquisition, or a qualifying tender offer. This protects employees from owing tax on illiquid equity. The cost: if the second trigger never happens, the RSUs effectively expire when you leave the company (typically 7-10 years post-grant).
- Should I sell my RSUs immediately at vest, or hold?
- Common advice: treat RSUs as cash and sell at vest. The reasoning: your salary already concentrates risk on the employer (job + paycheck). Holding RSUs concentrates a 3rd dimension (net worth) on the same employer. From a portfolio-theory standpoint, immediate sale-and-diversify minimizes idiosyncratic risk. Counter-argument: if you have strong conviction in the company AND you can afford the concentration risk, holding past long-term-capital-gains threshold (1 year) may be tax-advantaged.
- How does AMT apply to RSUs?
- AMT (Alternative Minimum Tax) usually does not apply to RSUs — RSUs are ordinary income at vest, captured in the regular tax calculation. AMT becomes a concern with ISOs (Incentive Stock Options): when you exercise an ISO and hold, the bargain element (FMV − strike) is added to AMT income and can trigger AMT liability for that year, even though no cash changed hands. AMT is one of the most common ways early-stage employees discover unexpected six-figure tax bills.
- How do I value RSUs in a job offer comparison?
- Use a 4-year amortized expected value:
annual_RSU_value = (4-year grant total ÷ 4) × P(grant_continues). For public companies,P(grant_continues) ≈ 0.85accounting for layoffs and stock drift. For private companies, multiply by liquidity probability (see Monte Carlo section). Then add to base + bonus for total expected comp. Levels.fyi has the cleanest public-company benchmarks; private-company comparisons require the Monte Carlo treatment in the calculator above.