---
title: Vesting cliff — what it means and why it matters | Allocate AI
description: 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.
canonical: https://allocateai.io/glossary/vesting-cliff
site: Allocate AI — https://allocateai.io
---

# 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.

A vesting cliff is a wall at the start of a vesting schedule. For a set period, most often twelve months, nothing vests. On the day the cliff ends, a big block vests at once, typically 25% of the whole grant, and after that the remainder arrives in smaller regular pieces.

Employers use cliffs to avoid handing stock to people who leave in the first few months. For you, the cliff creates a date that matters a great deal. Someone who starts on March 1 with a $100,000 grant and a one-year cliff has $0 of it on February 27 and $25,000 of it on March 1 of the next year.

Two things to plan around. First, the cliff vest is taxable income on that day, and the 22% supplemental withholding (2026) may not cover what you actually owe, so a large cliff can create a tax bill the following spring. Second, if you are thinking about leaving, the cliff date is the single most expensive date to miss.

A common mistake is counting unvested cliff stock as savings. Until the cliff passes it is not money; it is a reason to stay. In Allocate, add the cliff as an expected income event on its date, and the plan will show what it does to the month it lands in.

[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.
- [RSU (restricted stock unit)](https://allocateai.io/glossary/rsu) — 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.
- [Withholding gap](https://allocateai.io/glossary/withholding-gap) — The difference between the tax your employer took out during the year and the tax you actually owe, which becomes a bill or a refund in April.

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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.