Over $1 million
RSU vest over $1 million: federal withhold jumps to 37%.
Reviewed August 21, 2026. About. Not tax advice.
If a single paycheck of supplemental wages exceeds $1 million, employers withhold 37% federal on the excess, not 22%. On a $1.2M vest plus the Bay Area IC salary, this desk estimates $4,594 still due — much of the federal hole closes, leftover is mostly state and the last slices of Medicare. Most ICs never see this on one vest; stacked same-day vests can.
What this desk does
If RSUs + bonus ≥ $1,000,000 we apply 37% federal withhold on the supplemental, matching the mega-vest note. We still do not compute NIIT or CA millionaire brackets in full.
FAQ
- Is $1 million a calendar-year total or one paycheck?
- Publication 15’s 37% rate is about supplemental wages in a payroll period / the optional flat-rate method once the $1 million threshold is reached. Do not DIY the cutoff from a blog. If you are near it, send the stub to a CPA.
- Does 37% withholding mean I am even?
- Not always. 37% is the top federal ordinary rate, but state, additional Medicare, and NIIT are separate. California on a seven-figure vest is not a rounding error.
Sources
- IRS Publication 15 (Circular E) — Supplemental wage withholding: 22% up to $1 million, 37% above.
- IRS tax year 2026 inflation adjustments (Rev. Proc. 2025-32) — 2026 federal brackets and standard deduction.
- IRS estimated taxes — 1040-ES installment dates and underpayment penalty.