RSU Estimated Tax Payments: How to Avoid an April Surprise (2026)

Your employer withholds 22% on RSU vests. If your real marginal rate is 35–45%, you're structurally under-withheld every vesting date. This guide explains the safe harbor rules, how to calculate exactly what you need to pay, and when to pay it — so April doesn't blindside you.

Why RSU withholding isn't enough

When your RSUs vest, your employer must withhold federal income tax. The IRS requires them to use the 22% flat supplemental rate for most employees (37% only if your total supplemental wages from one employer exceed $1 million in the year).¹

For a software engineer with $180K base salary and $300K of RSUs vesting in 2026, the real marginal federal rate on that RSU income is likely 35–37%. The 22% withholding covers barely half. Add Medicare surtaxes, and the effective gap on $300K of RSU income can exceed $50,000.

That $50,000+ doesn't just create a tax bill — if you don't cover it through estimated payments or W-4 adjustments, the IRS adds an underpayment penalty on top of it (currently approximately 7–8% annualized, set quarterly).²

The safe harbor rules: how to know you're covered

The IRS won't charge an underpayment penalty if you satisfy one of these three tests:³

1. Current-year safe harbor: Your total withholding + estimated payments equal at least 90% of your actual 2026 tax liability.
2. Prior-year safe harbor (standard): Your total withholding + estimated payments equal at least 100% of your 2025 tax liability (from your 2025 return, Line 24).
3. Prior-year safe harbor (high earners): If your 2025 adjusted gross income exceeded $150,000 ($75,000 if married filing separately), the prior-year safe harbor rises to 110% of your 2025 tax liability.

For most tech employees with RSUs, test #3 applies. If you paid $95,000 in federal tax in 2025, you need to cover 110% of that — $104,500 — through withholding and/or estimated payments in 2026 to avoid the penalty, regardless of what you ultimately owe.

How to calculate your estimated tax shortfall

Here's the calculation sequence for a high-earning tech employee:

1. Start with last year's total tax (Form 1040, Line 24). Multiply by 110% if your prior-year AGI exceeded $150,000. This is your target annual payment under the safe harbor method.
2. Subtract expected W-2 withholding for 2026. Include withholding from salary, bonus, and RSU vests (even though RSUs are under-withheld, they still appear in Box 4 of your W-2).
3. The remainder is your estimated tax gap. This is what you need to cover through quarterly payments.
4. Divide by remaining quarters. Estimated tax is normally paid in four equal installments. But if a large RSU vest happens mid-year, you can "annualize" your income and pay larger amounts in the quarters when income was received (IRS Form 2210, Schedule AI).

Example: Your 2025 tax was $110,000. 110% of that is $121,000. You expect $90,000 of W-2 withholding in 2026 (salary + some RSU withholding). Your estimated tax gap is $31,000. Divide across the remaining quarterly payment dates.

2026 quarterly estimated tax due dates

If you missed Q1 or Q2 because you didn't expect a large RSU year, you can catch up in Q3 and Q4 — but interest on the underpayment from Q1 and Q2 still accrues from those due dates. The cleanest strategy is to set a calendar reminder in January and calculate your safe harbor target before the April 15 Q1 payment.⁴

How to pay: EFTPS and IRS Direct Pay

There are two primary ways to pay federal estimated taxes:

• IRS Direct Pay — free, no registration required, pay directly from a bank account at irs.gov/payments/direct-pay. Select "Estimated Tax" as the payment type and "1040-ES" as the form. Limit: $10 million per payment.
• EFTPS (Electronic Federal Tax Payment System) — requires one-time enrollment at eftps.gov. Allows scheduling future payments in advance, which is useful for setting up a quarterly auto-pay.
• Check / money order — payable to "United States Treasury," with a Form 1040-ES voucher attached. Mail to the IRS address for your state listed in the 1040-ES instructions. Not recommended — no confirmation receipt, and processing delays are common.

For most tech employees, EFTPS is the better long-term tool: schedule all four quarterly payments at the start of the year, and you're done. Direct Pay is fine for one-off payments when you realize mid-year that you're behind.

W-4 adjustment: an alternative to quarterly payments

If you'd rather not make separate estimated tax payments, you can increase withholding from your regular salary through a new W-4 form submitted to your employer. Line 4(c) of the W-4 lets you specify an additional flat dollar amount to withhold from each paycheck.

How to calculate the extra withholding:

1. Determine your estimated tax gap (same as above — target safe harbor minus expected withholding).
2. Divide by the number of remaining paychecks in the year.
3. Enter that per-paycheck amount on W-4 Line 4(c).

Example: You determine you need $36,000 more in withholding for the year, and you have 18 paychecks left (biweekly). Enter $2,000 additional per paycheck on your W-4. Your employer forwards this to the IRS with your regular withholding, and it appears on your W-2 — no separate quarterly payment required.

California: state estimated taxes are separate

California has its own estimated tax system, completely separate from federal. CA FTB requires estimated payments if you expect to owe more than $500 (single) or $1,000 (married) after withholding and credits.⁵

California 2026 quarterly due dates:

• Q1 (January–March): April 15, 2026
• Q2 (April–June): June 16, 2026
• Q3 (July–September): September 15, 2026
• Q4 (October–December): January 15, 2027

CA supplemental withholding rate is 10.23%, but California's top marginal rate for high earners is 12.3% (plus the 1% Mental Health Services Tax on income above $1M). A $300K RSU vest withheld at 10.23% leaves a gap of roughly $6,200–$9,000 depending on your total CA income.

Pay California estimated taxes at ftb.ca.gov using Web Pay for Individuals (free) or submit Form 540-ES by mail.

New York and New York City

New York state imposes its own estimated tax requirement. NY also has NYC income tax for city residents (3.876%), with separate calculation and thresholds. For NYC residents, the combined state + city + federal underpayment problem can be substantial. NY estimated taxes are paid via the NY Department of Taxation and Finance using IT-2105 vouchers.

The $1,000 rule: when estimated payments aren't required

You don't need to make quarterly estimated payments if your total expected underpayment (after withholding) is less than $1,000. For most tech employees with meaningful RSU income, this threshold is not a realistic escape — a $200K vest year at a 15-percentage-point withholding gap creates a $30,000 underpayment, well above $1,000.

The $1,000 threshold matters mainly for small one-off events: a small ESPP disqualifying disposition, a minor consulting income item, or a year where base salary alone is your primary income and RSU vesting was minimal.

Common mistakes tech employees make on estimated taxes

1. Waiting until April to think about it. By April 15, Q1 is already due. If a large RSU vest happened in January–March, the Q1 estimated payment should cover that quarter's tax exposure. Waiting until you do your taxes in April means you've already missed Q1 and Q2 and owe retroactive interest.
2. Using current-year estimates with volatile income. If your RSUs vest on an unpredictable schedule, the current-year (90%) method requires estimating an income number that could swing significantly. The prior-year 110% method gives you a certain, fixed target. Use it.
3. Forgetting state estimated payments. Federal and state are separate systems with separate payment portals. Covering the federal gap but ignoring California can still generate CA underpayment penalties.
4. Assuming ISO exercises don't create estimated tax exposure. ISOs trigger the AMT, which is not reflected in W-2 withholding at all — the bargain element is not subject to regular withholding. A large ISO exercise in Q1 with no estimated payment creates a penalty even if your W-2 withholding otherwise satisfies safe harbor on regular income.
5. Not adjusting when a large RSU vest is coming. If you know a cliff vesting is scheduled for Q2, set a reminder in April to make an extra estimated payment by June 16, or submit an updated W-4 to cover it through increased salary withholding.

What an advisor handles here that you can't easily do alone

Estimating your safe harbor target is arithmetic. But optimizing how much to pay — balancing the safe harbor floor against the opportunity cost of overpaying, modeling ISO exercise scenarios that affect AMT, projecting the year-end true bill so you're not overwithholding by $40K — that's judgment. An equity-comp specialist does this projection in a single planning session, accounting for all income sources simultaneously.