If you had a lot of RSUs vest this year, the taxes withheld by your employer may not cover what you owe. And some decisions that could improve your situation have deadlines earlier than December 31.
Let’s walk through five decisions to review before the year ends.
My name is Nathan Donohue, and I've spent over 15 years working with recipients of stock compensation.
Strategy number 1 is closing the withholding gap.
Let’s look at an example - say $300,000 of RSUs vested for you this year. Many employers withhold federal income tax on RSU income at the flat 22% rate. That's $66,000.
But if all of that income lands in the 35% bracket, depending on your full tax picture, the tax on it is $105,000. That's a $39,000 gap. And you might not find out until April when your CPA hands you bad news.
Start with what's been withheld so far on your latest paystub. Add the withholding still expected from your remaining paychecks and vests, plus any estimated payments you've made. Then compare that total with a full-year tax projection from your CPA. The difference is your gap.
Then there's safe harbor. In general terms, you can avoid the underpayment-of-estimated-tax penalty if what you've paid in covers 90% of this year's tax, or 100% of last year's. If last year's adjusted gross income was over $150,000, that second number becomes 110%.
Meeting the safe-harbor requirements can protect you from an underpayment penalty. The bill still comes due.
2 common ways to pay down your tax gap are: 1) making estimated payments by the IRS due date, or 2) increasing your withholding on your future paychecks or RSU vests. Some employers let you increase your RSU withholding rate above the standard 22% rate. So check with your employer to see if you have this option.
Strategy number 2 is deciding whether to keep this year's vests.
Ask yourself this. If your company had paid you this amount in cash, instead of RSUs, would you use 100% of that cash to buy its stock?
For some people, the honest answer is yes. For others, the shares just piled up.
Your paycheck, your future stock awards, and part of your investment portfolio may already depend on the same company. Look at those exposures together before deciding how much stock to keep.
On taxes, selling generally doesn't undo the income tax from vesting. The value at vest was taxed as income, and generally that value becomes your cost basis. The next tax question is what happened to the share price after the vest. So if the price hasn't moved much since the vest, selling generally creates little additional gain or loss.
Holding changes that. Sell within a year of vesting and any gain since the vest is generally taxed at ordinary income rates. Hold more than a year and that gain can qualify for long-term rates. Meanwhile the stock can rise or fall, and concentrated positions carry the risk of significant loss.
And if you plan to sell this year, your company's trading window may close before the year ends. Check your insider trading policy first.
If you do sell at a gain, decision 3 can soften it. But it has a trap tied to your next vest.
Strategy number 3 is harvesting losses.
If you’ve had taxable realized gains throughout the year, you can offset those gains with realized losses. After selling one asset at a gain, you can sell another at a loss.
These losses primarily offset capital gains. They generally won't erase the income tax on your RSU compensation.
If your losses are bigger than your gains, up to $3,000 a year can offset ordinary income, and the rest carries forward to future tax years. To count for this year, the sale needs to happen by the last trading day of the year.
Here's the trap. The wash sale rule. If you acquire the same stock within 30 days before or after you sell it at a loss, the loss can be disallowed. And a new vest can count. So can a purchase in your IRA, or in your spouse's account.
So if you have a December vest, a loss sale in the weeks before it can cause wash sale issues. And the window runs both ways. A loss sale in late December can also run into a vest in January. Check your vest calendar before you harvest losses on company stock.
Strategy number 4 is donating to charity.
If charitable giving is already part of your plan, review both when you give and which assets you give. Appreciated shares you've held for more than a year may offer a larger tax benefit than cash.
Start with timing. In a high-income year, a deduction can be worth more. That's one reason some people bunch several years of giving into one year with a donor-advised fund, or DAF. You contribute in the high-income year, take the deduction that year if you itemize, and spread out grants to charities over time.
Bunching can also help with a new rule for 2026. If you itemize, only charitable giving above 0.5% of your adjusted gross income is generally deductible. Further, the 2026 change capped the benefit of itemized charitable deductions at 35% for top tax brackets. So small gifts spread evenly across years can count for less than they used to.
Then the assets. A gift of stock you've held more than one year to a public charity, including a DAF, generally avoids realizing the capital gain, and if you itemize you may be able to deduct its full market value, within limits. For shares held one year or less, the deduction is limited to the lower of your cost basis or the current market value.
This tax strategy only makes sense if you were going to give anyway.
Which brings us to strategy number 5. Your 401(k).
For 2026, you can defer up to $24,500 into a 401(k), plus catch-up contributions if you're 50 or older.
Pre-tax deferrals come out of your taxable wages, so in a big year each dollar deferred could save tax at your top rate, depending on your full tax picture.
One exception is new this year. If your FICA wages from this employer last year were over $150,000, your catch-up contributions generally have to go in as Roth, which doesn't lower this year's taxable income. That requirement applies to the catch-up portion. Your regular contributions may still be pre-tax.
Here's the paycheck problem. Deferrals come out of your paychecks. You can't write a check in April to catch up. And payroll may need the change a pay period or more ahead, so ask HR how late you can change your election.
So there are the 5 strategies. Let’s summarize the 5 strategies: 1) Close the gap. 2) Decide on the vests. 3) Harvest losses. 4) Time the donations, and 5) Fill the 401(k).
Start by getting a tax projection from your CPA. If you want help coordinating that with your company stock, cash needs, and retirement contributions, click the link in the description and tell us about your situation.
This video is educational and general in nature. It is not tax, legal, or investment advice, and it is not a recommendation to buy, sell, or hold any security. The figures used here are hypothetical, for illustration only, and reflect federal rules as of 2026, which can change. State taxes and your individual circumstances can meaningfully change the outcome.