Equity compensation creates the biggest year-end surprises we see: under-withheld RSU vests, ISO exercises that trigger AMT, and share sales that land in the wrong year. Here is the dated checklist to head them off.
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Tax planning slots are limited before year-end.
If you hold RSUs, the first year-end task is closing the withholding gap. Employers usually withhold federal tax on vests at a flat 22%, while high earners often owe 32% to 35% on that income. Extra withholding from December paychecks counts as paid evenly through the year and can keep you inside the safe harbor.
If you hold ISOs, exercises and sales before December 31 decide your 2026 AMT. If you hold ESPP shares or concentrated company stock, the year-end questions are which lots to sell, which to donate, and whether to wait until January.
Worked example (illustrative)
A senior engineer earns a $250,000 salary, with withholding that matches the tax on the salary alone. $300,000 of RSUs vested in 2026, with federal tax withheld at the 22% supplemental rate. Last year's federal tax was $120,000. Single filer, standard deduction.
| RSU income vesting in 2026 | $300,000 |
|---|---|
| Federal tax withheld on the vests at 22% | $66,000 |
| Federal tax actually owed on that income (32% and 35% brackets) | $104,330 |
| Shortfall on the RSUs | $38,330 |
| Safe harbor: 110% of $120,000 of 2025 tax | $132,000 |
| Projected 2026 withholding (salary plus vests) | $117,304 |
| Extra December withholding to reach the safe harbor | $14,696 |
Withholding the extra $14,696 in December avoids the underpayment penalty, but $23,634 would still be due on April 15, 2027. Withholding the full $38,330 removes the April surprise too.
A January 15 estimate would also help, but an estimate counts only from the date paid, so it does not cure the earlier quarters the way extra withholding does.
The example ignores state tax, which often has its own supplemental withholding gap, and any investment income subject to the 3.8% NIIT.
Illustrative composite with simplified assumptions, not a client result and not a projection of what you will save. Your numbers depend on your full return.
Dated moves in deadline order. Check items off as you go, or print it.
Taxstra 2026 year-end tax checklist: RSU, ISO and ESPP Holders
taxstra.com/year-end-tax-planning-checklist/equity-compensation/ · Last reviewed October 20, 2026 · Educational, not individualized tax advice.
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Rule changes that move this year's year-end math
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Tax planning slots are limited before year-end.
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Tax planning slots are limited before year-end.
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Most employers withhold federal tax on vests at a flat 22% (37% above $1 million of supplemental wages). If your income puts you in the 32%, 35% or 37% bracket, the difference comes due with your return. Raising withholding before year-end closes the gap without a separate estimate.
It depends on your AMT room in each year. A December exercise puts the spread into 2026 AMT; a January exercise moves it to 2027 and starts the one-year holding period later. A projection for both years usually settles it.
If you sell the shares in the same calendar year you exercised, the sale is a disqualifying disposition and there is no AMT adjustment for those shares. The spread is taxed as ordinary income instead, so this mostly helps when the stock has fallen since exercise.
It can. A vest of the same stock within 30 days before or after a loss sale may be treated as a replacement purchase, which disallows part of the loss and moves it into the new shares' basis. Planning loss sales away from vest dates avoids the issue.
No. The free 30-minute call is with our team and covers your needs, our services and fit. An AMT projection and exercise plan is part of a paid engagement.
Want the general version? See the year-end tax planning checklist and the full list of 2026 and 2027 tax due dates.
Book a free 30-minute consultation with our team. Tell us what you need, learn how Taxstra can help, and explore whether our services are a good fit. Tax advice, document reviews, and analysis require a paid engagement.Your tax plan and specific advice come after you engage. The call is about fit and next steps.
Tax planning slots are limited before year-end.
Coordinate vesting, exercises, sales, withholding, and the rest of your return before a deadline drives the decision.
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