To sell vested stock, log in to the brokerage your employer uses to administer its equity plan, confirm the shares have cleared vesting, make sure your tax paperwork is on file, and place a sell order against the specific lot you want to liquidate. The money hits your bank a business day after the trade settles. The harder part is the tax: your shares were already taxed as ordinary income the day they vested, so the sale itself only triggers capital gains or losses on the price change since then. Mishandle that distinction on your return and you can end up paying tax twice on the same dollars.
Know Which Type of Equity You’re Selling
Two forms of vested employer stock dominate: restricted stock units (RSUs) and restricted stock awards (RSAs). The sale mechanics are the same. The cost basis isn’t.
RSUs are a promise to deliver shares once vesting conditions are met. You own nothing until the vest date, and on that date the full fair market value of the shares shows up as ordinary income on your W-2. Most employees at publicly traded companies hold RSUs.
Restricted stock awards hand you actual shares at grant, subject to forfeiture until they vest. By default they’re taxed the same way as RSUs: fair market value at vesting counts as ordinary income. But RSA holders can file an 83(b) election within 30 days of the grant date to pay ordinary income tax on the grant-date value instead. If you filed one, your basis for the eventual sale is that grant-date value plus the tax you paid. If you didn’t, your basis is the vesting-date value. The 30-day deadline has no extensions. RSU holders cannot file an 83(b).
What to Line Up Before You Place the Order
Your grant agreement or plan document names the brokerage your employer uses and lists your grant ID and vested share count. Create a profile on that brokerage portal if you haven’t already, and confirm your name, address, and Social Security number match payroll.
The brokerage needs a valid Form W-9 on file before it will release proceeds. Without one, it must withhold 24% of the sale as backup withholding and send it to the IRS. Non-U.S. participants file Form W-8BEN instead.
Pull up the cost basis the brokerage shows for each lot and check it against the fair market value on the day those shares vested. Brokerages routinely report equity-compensation shares with a zero basis or the original grant price, both of which are wrong for shares that were already taxed at vesting. You can’t always get the brokerage to change what prints on your 1099-B, but noting the correct number now saves hours at tax time.
Placing the Sell Order
In the trading or equity section of the portal, you’ll see your vested shares broken into lots. Each lot has its own vest date and basis. Which lot you pick matters: shares held more than a year past their vest date qualify for long-term capital gains rates; shares sold inside a year are taxed at your ordinary income rate.
Choose an order type. A market order sells at the current price and fills almost immediately during trading hours. A limit order only executes if the stock reaches a price you set, which can leave the order unfilled. For straightforward liquidation of employer stock, a market order gets it done.
Don’t confuse this with the “sell-to-cover” that may have run automatically at vesting. Sell-to-cover sells just enough shares to pay the withholding your employer owed on the vesting event. Anything still in your account after that is yours to sell on your own schedule, subject to your company’s trading rules.
Trades settle one business day after execution under the T+1 standard that took effect in May 2024.1FINRA. Understanding Settlement Cycles: What Does T+1 Mean for You? After settlement, you can move the cash to a linked bank account by ACH or wire. If you don’t send it anywhere, it sits in the brokerage’s cash account.
When You’re Allowed to Sell
Vesting doesn’t give you an open door to the market. Public companies run trading windows, usually a few weeks after an earnings release, during which employees may trade. Outside those windows you’re in a blackout and can’t sell. HR or the legal department publishes the schedule internally.
The separate and larger issue is material nonpublic information. If you know something about the company that an investor would want to know before deciding to buy or sell, trading on it violates Section 10(b) and Rule 10b-5 of the Securities Exchange Act.2LII / Legal Information Institute. Rule 10b-5 Civil penalties can reach three times the profit made or loss avoided,3Office of the Law Revision Counsel. 15 USC 78u-1 – Civil Penalties for Insider Trading and criminal cases carry up to 20 years in prison and $5 million in fines for individuals.
Officers, directors, and holders of more than 10% of the company’s stock also have to file a Form 4 with the SEC by the end of the second business day after each transaction.4SEC.gov. Form 4 – Statement of Changes in Beneficial Ownership of Securities Insiders who regularly possess MNPI typically trade under a pre-arranged Rule 10b5-1 plan rather than placing one-off orders.
How the Sale Is Taxed
Selling vested stock involves two separate tax events. Keeping them straight is the single most valuable thing you can do with equity compensation.
The first event already happened at vesting. The fair market value of the shares on the vest date was added to your W-2 as ordinary income, and your employer withheld tax on it. That tax applies whether you sell or hold.
The second event is the sale itself. You owe capital gains tax only on the difference between your sale price and the vesting-date value (your cost basis). If 500 shares vested at $40 and you sell at $55, your gain is $15 per share, or $7,500. Sell at $30 and you have a $10 per share loss, which can offset other gains or up to $3,000 of ordinary income per year.
Shares held more than one year after vesting qualify for long-term capital gains rates, which top out at 20%. Shares sold within a year are taxed at your ordinary income bracket.5Internal Revenue Service. Topic No. 409, Capital Gains and Losses For 2026, the long-term brackets are:
- 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
An additional 3.8% Net Investment Income Tax applies to capital gains once modified adjusted gross income exceeds $200,000 single or $250,000 married filing jointly. Those thresholds are not indexed for inflation.6Internal Revenue Service. Questions and Answers on the Net Investment Income Tax
The Withholding Shortfall That Catches Sellers in April
Employers withhold on vesting income at the federal supplemental wage rate of 22%, rising to 37% on supplemental wages above $1 million in a calendar year.7Internal Revenue Service. Publication 15 (Circular E), Employer’s Tax Guide If your salary and vesting income together put you in the 32% or 35% bracket, 22% isn’t enough. State withholding on equity is often also light. The gap can be five figures.
Close it with quarterly estimated payments on Form 1040-ES. To avoid an underpayment penalty for 2026, your total withholding plus estimated payments must reach the lesser of 90% of your 2026 tax or 100% of your 2025 tax. If your 2025 adjusted gross income was over $150,000, that second number rises to 110%.8IRS. 2026 Form 1040-ES Estimated Tax for Individuals Run a projection right after a large vest or sale rather than waiting for April.
Fixing the 1099-B So You Don’t Pay Twice
After year-end, your brokerage sends you and the IRS a Form 1099-B with the sale price, date, and reported cost basis for each lot.9Internal Revenue Service. Instructions for Form 1099-B (2026) For equity compensation, the reported basis is often zero or the grant price, both of which understate what you actually paid for the shares (which was ordinary income tax on their vesting-date value). Filing on the wrong number means paying capital gains tax on income you already paid wage tax on.
The correction goes on Form 8949. Enter the correct basis and use adjustment code “B” to flag the discrepancy. For RSUs and for RSAs without an 83(b) election, the correct basis is the fair market value on the vesting date, which should tie to the amount added to your W-2. If you filed an 83(b) on an RSA, the basis is the grant-date value plus any tax paid at that time.10Internal Revenue Service. Instructions for Form 8949 (2025) Keep the vesting statements and W-2s that back up the number.
Selling at a Loss: Watch for a Wash Sale
If you sell vested shares at a loss, the wash sale rule in IRC Section 1091 disallows the loss if you buy substantially identical shares within 30 days before or after the sale.11Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities The window runs both directions, giving you a 61-day zone around the sale.
A future RSU vest counts as an acquisition of the same stock. Sell company shares at a loss in early December and let another lot vest in late December, and the wash sale rule can wipe out the loss deduction. The disallowed loss gets added to the basis of the replacement shares rather than vanishing outright, but the tax benefit is delayed and the recordkeeping gets messy. Check your vesting calendar before harvesting a loss on employer stock.