---
title: RSU (restricted stock unit) — what it means and why it matters | Allocate AI
description: A promise from your employer to give you shares of company stock on a future date, as long as you are still there when that date arrives.
canonical: https://allocateai.io/glossary/rsu
site: Allocate AI — https://allocateai.io
---

# RSU (restricted stock unit)

A promise from your employer to give you shares of company stock on a future date, as long as you are still there when that date arrives.

A restricted stock unit is a promise, not a share. Your employer says: stay with us, and on these dates we will hand you this many shares. Until a date arrives (called vesting), you own nothing you can sell. Once it arrives, the shares are yours, the same as if you had bought them.

RSUs matter because for many people they are the second-largest piece of pay, and the most misunderstood. A grant of $200,000 vesting over four years is worth about $50,000 a year, paid in stock, at whatever the stock is worth on each vest date. If the price doubles, so does that year's pay. If it halves, so does that.

The tax part surprises people. On the day shares vest, their value counts as ordinary income, like a cash bonus. Your employer usually sells some shares to cover withholding, typically at the 22% flat rate for supplemental wages (2026). If your real tax rate is higher, you owe the difference in April.

A common mistake is treating vested shares as a windfall to be left alone. They are pay. Deciding whether to hold or sell is a real investing decision, not a default. In Allocate, a vest is an expected income event with its own date, so the plan counts it the way it counts a paycheck.

[Try the RSU Tax Calculator →](https://allocateai.io/calculators/rsu-tax)

## Related terms

- [Vesting (and vesting schedules)](https://allocateai.io/glossary/vesting) — The process by which promised stock or retirement money becomes truly yours over time, usually on a fixed calendar called a vesting schedule.
- [Vesting cliff](https://allocateai.io/glossary/vesting-cliff) — A waiting period, usually one year, during which none of your stock grant vests; at the end of it a large chunk vests all at once.
- [Supplemental wages (and supplemental withholding)](https://allocateai.io/glossary/supplemental-wages) — Pay that is not regular salary, like bonuses, commissions, and vested stock, which the IRS lets employers withhold on at a flat 22% rate (2026).
- [Expected income event](https://allocateai.io/glossary/expected-income-event) — In Allocate, a bonus, commission, or stock vest you tell the app about in advance, so the plan counts it as income on the date it is due to arrive.

**Plan in plain language.**

Allocate answers “can I afford this?” from your own numbers, writes the plan, and stages every change for your yes. It starts from an estimate before you link a bank.

[Get started](https://app.allocateai.io/signup)

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Allocate AI is a budgeting and financial-planning app: link your accounts, say what you want in plain words, and it writes the plan and stages every change for your approval. Read more at https://allocateai.io or see all pages in https://allocateai.io/llms.txt.