Selling RSUs Immediately vs. Holding

You just got a batch of RSUs. They vested, shares hit your account, and now you're staring at a decision: sell immediately or hold?

Here's how I think about it from a tax perspective.

First, something worth understanding. The tax on the shares you just received? That already happened. When your RSUs vested, the fair market value was added to your income and taxed. That's done regardless of what you do next. What you're deciding now is what happens after that.

So what are the tax implications of each path?

If you sell immediately, you're done. No additional gain, no additional loss. Whatever was withheld at vesting is your tax event.

If you hold, now you're an investor. The stock can go up or down from here, and the tax treatment depends on what happens next. Sell within a year and any gain is taxed at ordinary income rates, the same rate as your paycheck. Hold longer than a year and you get preferential long-term capital gains rates, which for most Bay Area tech employees is meaningfully lower.

But here's the other side of that. If the stock drops after vesting and you eventually sell at a loss, you have a capital loss, which can offset other capital gains. That's not nothing.

The question of whether to hold or sell based on where you think the stock is going is a financial planning conversation, not a tax one. Talk to your financial advisor about that piece. But whichever direction you go, knowing the tax consequences ahead of time makes it a better decision. If you want to walk through what that looks like for your specific situation, feel free to reach out.