To sell RSUs, you wait for the shares to vest, choose how taxes will be withheld, and place a sell order through the brokerage account your employer uses for equity compensation, avoiding any blackout period around earnings. The trade itself takes minutes. The part that trips people up comes later, on the tax return, where a cost basis error on your 1099-B can have you paying tax twice on the same income.
When Your Shares Are Actually Yours
You can’t sell RSUs before they vest. Until then they’re a contractual promise, not shares. Under federal tax law, the fair market value of the stock is included in your income the day the substantial risk of forfeiture lapses, which in practice is the vesting date when shares land in your brokerage account.
Most grants use time-based vesting, often 25% a year over four years. Some use performance triggers tied to revenue, profit, or stock price, and some combine both. A cliff schedule releases everything at once after a waiting period; a graded schedule releases it in installments. Your grant agreement spells out which you have.
Leave the company before a tranche vests and you almost always forfeit it. Exceptions such as accelerated vesting on death, disability, or change of control exist only if your grant agreement or a severance deal puts them there.
Blackout Periods
Most public companies close trading windows for a few weeks before each quarterly earnings release and reopen them a day or two after the results are public. Selling during a blackout can lead to termination and SEC enforcement action, so check your company’s insider trading policy before you plan a sale date. Senior employees who routinely hold material nonpublic information sometimes use a Rule 10b5-1 plan, which requires a 30-day cooling-off period after adoption before any trade can execute.1Securities and Exchange Commission. Rule 10b5-1 Insider Trading Arrangements and Related Disclosure For most employees, selling during an open window is enough.
Pick a Withholding Method Before the Vest
A meaningful slice of your RSU value goes to tax withholding before you ever place a trade. Your employer treats the fair market value of the vesting shares as supplemental wages. For 2026, federal withholding on supplemental wages up to $1 million is a flat 22%, and 37% on any excess.2Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide Social Security (6.2% to the wage base), Medicare (1.45%, plus 0.9% on wages over $200,000), and state income tax come out on top of that.
You’ll usually be asked to choose one of three methods before the vesting date:
- Sell to cover: the broker sells enough shares to pay the tax bill and you keep the rest. This is the usual default.
- Net shares: your employer withholds shares to cover taxes, and you receive fewer shares.
- Cash transfer: you pay the taxes out of pocket and keep every share.
The trap in all three is that the 22% federal rate rarely matches your actual bracket. If you’re in the 32% or 35% bracket, you’ll owe more when you file. Plan for the shortfall in advance.
Placing the Sale
Public company RSUs almost always sit at Fidelity, Schwab, Morgan Stanley, or E*Trade. Confirm you can log in well before the vesting date so you’re not resetting a password on the day you want to trade. Once the shares appear in your account and the trading window is open, go to your positions page. Vested shares are listed separately from shares still on the schedule.
Two order types cover most sales:
- Market order: sells immediately at the current price. Use this when you want the sale done now.
- Limit order: only executes if the stock reaches a price you set. Useful if you have a target price in mind, with the risk that the order expires unfilled if the stock never gets there.
Submit the order and a market sale usually fills within seconds during trading hours. Settlement follows T+1, so cash appears in your brokerage account one business day after the trade.3Securities and Exchange Commission. Shortening the Securities Transaction Settlement Cycle From there, ACH to your bank takes another one to two business days; a wire is faster and usually carries a fee.
Short-Term vs Long-Term: Does Holding Pay Off?
The vesting-date value has already been taxed as ordinary income through your paycheck. Anything that happens to the share price after vesting is a separate capital gains event. Sell immediately at vesting and there’s usually little or no gain. Hold and the stock rises, and you’ll owe capital gains tax on the difference between the vesting-date price and the sale price.
The holding period starts the day the shares vest, when the substantial risk of forfeiture lapses.4Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services Long-term capital gains rates apply only if you hold more than one year from that date.5Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses Sell before then and any gain is taxed at your ordinary income rate.
For 2026, long-term capital gains rates are:6Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates
- 0% on taxable income up to $49,450 single or $98,900 married filing jointly
- 15% from $49,451 to $545,500 single, or $98,901 to $613,700 married filing jointly
- 20% above $545,500 single or $613,700 married filing jointly
High earners also owe the 3.8% net investment income tax on capital gains once modified AGI exceeds $200,000 single or $250,000 married filing jointly, pushing the effective top rate to 23.8%.7Internal Revenue Service. Topic No. 559, Net Investment Income Tax
Holding for the lower rate is a bet that the tax savings will outweigh the risk of a price drop. When a large share of your net worth is already tied up in one employer’s stock, that bet often looks worse than diversifying now.
Fix the Cost Basis on Your Tax Return
This is where RSU sellers most often overpay the IRS. The Form 1099-B you get from your broker frequently reports a cost basis in Box 1e of $0, or a figure that ignores the income already taxed at vesting. File your return using that number and you’ll be taxed twice: once as ordinary income on your W-2 for the vesting, and again as a capital gain on the full sale price.
The correction happens on Form 8949. Enter the basis the broker reported in column (e), then use column (g) to adjust it up to your true basis, which is the fair market value of the shares on the vesting date.8Internal Revenue Service. 2025 Instructions for Form 8949 You can find that vesting-date value on the supplemental tax statement your broker issues for equity compensation, or back it out of your W-2.
The supplemental tax statement is the key document here. Brokers create it specifically to fill this gap, but they don’t send it to the IRS, so using it is on you. If you can’t find it, call your equity plan services line and request it before you file. The adjusted numbers flow from Form 8949 to Schedule D on your 1040. Done correctly, if you sold at vesting, the taxable gain often collapses to near zero.
Watch for Wash Sales When You Have Repeated Vesting
The wash sale rule disallows a loss if you acquire substantially identical shares within 30 days before or after the sale.9Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities Vesting counts as acquiring shares. So if you sell company stock at a loss and another RSU tranche vests inside that 61-day window, the loss is disallowed for the current year.
You don’t lose the loss permanently. It gets added to the cost basis of the newly vested shares and comes back when you sell those. But it does throw off tax planning, and it comes up constantly for anyone on a monthly or quarterly vesting schedule. Before selling at a loss, check the calendar against your next vesting date.
Avoiding an Underpayment Penalty
A big RSU vest can leave you owing more federal tax than the flat 22% withholding covered. If the shortfall is large enough, the IRS charges an underpayment penalty. You avoid it by meeting one of these safe harbors:
- Paid at least 90% of the current year’s total tax through withholding and estimated payments.
- Paid at least 100% of the prior year’s tax liability (110% if your prior-year AGI was over $150,000, or $75,000 if married filing separately).
- Owe less than $1,000 after withholding and refundable credits.
If a vest clearly pushes you past what withholding covers, making a quarterly estimated payment shortly after the vesting date is the simplest fix. Form 1040-ES has the vouchers, and IRS Direct Pay handles it electronically.
If Your Company Is Private
Everything above assumes a public company. If your employer isn’t publicly traded, you can’t open an app and sell. Private RSUs vest the same way, but there’s no public market. Your options usually come down to a company-run tender offer or liquidity program, a secondary-market sale that typically needs company approval because of a right of first refusal, or waiting for an IPO or acquisition. Some employees at eligible private companies can also make a Section 83(i) election to defer the ordinary income tax at vesting for up to five years, though senior officers and 1% owners are excluded.4Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services Assume illiquidity until one of those paths opens.