By Team SalaryCalculate · 7/22/2025
Stock bonuses and RSUs (Restricted Stock Units) can both feel like a windfall—but they’re taxed very differently. If you’re in Texas, where there’s no state income tax, you might assume the IRS takes a lighter touch. But when it comes to stock compensation, timing and structure matter more than location.
Here’s the key difference: Stock bonuses are taxed when paid. RSUs, on the other hand, are taxed when they vest—not when they’re granted. So even if your RSUs were awarded years ago, the IRS only cares about what they’re worth the day they vest. And that can come with a hefty tax bill, especially if the stock price has soared.
Both stock bonuses and RSUs are treated as income, which means they’re subject to federal income tax, Medicare, and Social Security. But RSUs can push you into a higher tax bracket when they vest, depending on your other earnings.
Use our Texas bonus calculator to estimate your take-home pay from a cash or stock bonus.
How Stock Bonuses and RSUs Are Taxed in Texas
Let’s break down how these two types of stock-based compensation are handled by the IRS for 2025 and 2026.
🟢 Stock Bonuses (Cash Equivalent):
- Counted as regular income when paid
- Withholding typically at 22% (flat rate up to $1M)
- Over $1M? Withheld at 37%
- Also subject to: Medicare (1.45%), Additional Medicare Tax (0.9% over $200K), Social Security (up to $168,600)
🔵 RSUs (Restricted Stock Units):
- Not taxed when granted
- Taxed as ordinary income when vested, valued at market price on vesting date
- Same tax treatment as above, including payroll taxes
The key difference is that RSUs trigger a tax event based on market value, not company decision.
Example: Sarah's RSU vs Bonus Scenario
| Compensation Type | Value | Tax Withheld (Fed + Payroll) | Net After Tax |
|---|---|---|---|
| Cash Bonus | $25,000 | ~$6,900 (27.5%) | ~$18,100 |
| RSUs Vested | $25,000 | ~$6,900 (same withholding) | ~$18,100 |
Now assume Sarah had $160,000 salary and RSUs vest worth $75,000. That extra income could bump her into a higher tax bracket or trigger the Additional Medicare Tax.
Why RSUs Can Feel Like a Surprise Tax Bill
Most employers withhold 22% on vested RSUs, but your actual tax rate might be 32% or higher. That means you could owe more at tax time.
Check if your employer lets you increase RSU withholding or automatically sell shares to cover taxes.
RSU Tax Timing Traps
You don’t choose when RSUs vest, and you can’t defer them. That can make it harder to reduce taxes compared to a traditional cash bonus.
Table: Summary of RSU vs Stock Bonus Taxation (Texas, 2025)
| Feature | Stock Bonus | RSU (at Vesting) |
|---|---|---|
| Taxed as income | ✅ Yes | ✅ Yes |
| Federal withholding | 22% (<$1M) | 22% default |
| Subject to SS + Medicare | ✅ Yes | ✅ Yes |
| State tax (Texas) | ❌ None | ❌ None |
| Timing of taxation | On payment | On vesting |
| Can defer? | ❌ No | ❌ No |
| Can reduce with 401(k)? | ✅ If elective | ❌ No |
To estimate your potential retirement savings and tax impact, try our Texas SIPP calculator.
Common Misunderstandings
“Texas has no income tax, so I won’t pay much on RSUs.” – You’ll still owe federal taxes.
“RSUs are capital gains, right?” – Not until you sell. Vesting is taxed as ordinary income.
“If I don’t sell my RSUs, I don’t owe tax.” – Wrong. Tax is due when they vest, not when sold.
