2026 RSU supplemental withholding rates

What rate gets withheld on your RSUs when they vest in 2026? A flat supplemental rate, set by federal rule, that does not care about your personal tax bracket. That is the whole story and the whole problem. The rate is the same for a new grad and a principal engineer, which means for high earners it withholds too little, every single vest.

How the rate is set

RSU income is supplemental wages. Supplemental wages get withheld at a flat federal percentage, not at your marginal rate. There is a standard flat rate up to an annual threshold, and a higher flat rate on supplemental income above that threshold.

For 2026 that flat rate is 22% on the first $1,000,000 of supplemental wages in the year, and 37% on anything above $1,000,000 2026. The higher rate only kicks in once your cumulative supplemental wages cross $1,000,000 for the year.

Why a flat rate under-withholds high earners

Here is the part that turns a rate into a tax bill. The flat supplemental rate is fixed, but your real marginal rate rises with income. If your top bracket is above the flat rate, the difference is under-withheld on every dollar of vested stock.

You do not feel it per vest. You feel all of it at once when you file, and if the shortfall is large enough, the IRS adds an underpayment penalty. The full mechanics are in the under-withholding surprise, and the way to cover it during the year is in estimated tax payments.

What did not change

The structure is stable year to year even as the dollar figures move. RSUs are still taxed as ordinary income at vesting. Withholding is still flat-rate supplemental, not bracket-based. The gap between flat withholding and your real rate is still yours to cover. So the planning move is the same as it always was: size the gap and fund it.

Does the higher supplemental rate help high earners?

A little, but usually not enough. The higher flat rate only applies to supplemental income above the annual threshold, and even that higher rate can sit below the top marginal rate once state tax and the extra Medicare and net investment income taxes are layered in. It narrows the gap, it rarely closes it.

Where do these official numbers come from?

The flat supplemental rates and thresholds are set in IRS guidance and updated for inflation and law changes. For 2026 the flat rate is 22% up to $1,000,000 of supplemental wages and 37% above that 2026. The structure is stable year to year; only the dollar thresholds move with inflation and any law changes.

The takeaway for 2026 is the same one that has held every year: the flat rate is a starting point, not the finish line. Confirm this year’s numbers, measure them against your real rate, and fund the gap on vesting day. If your vesting is large, a short fit check can make sure the flat rate is not quietly setting you up for a spring surprise.