Your Equity Is Worth More Than It Was. Three Moves Before December 31.
September 12, 2026
Tech stocks rebounded and your equity is worth more than it was in the spring. Three moves worth making before December 31, from a CPA who plans this every fall.
If you hold equity compensation and your company's stock ran this summer, there are three things worth doing this quarter: decide deliberately what to do with a position that quietly got more concentrated, recalculate your withholding rather than your estimated payments, and make sure the elections on any future awards are the right ones. Each of those is only available while the year is still open.
A rally does not create a tax bill by itself. What it does is enlarge one that was already forming, because the shares vesting this fall are worth more than anyone modeled when the year started, and the tax on them was set up in advance.
This is educational, not advice for your situation. The right answer depends on your award type, your holding periods, whether your employer is public or private, and last year's numbers. But the questions below are the same for everyone, and the fourth quarter is when they can still be answered usefully.
Why This Fall Is Different
Two things happened at once. Technology led the market through the summer, and the vesting schedules that produce your income were locked in long ago.
That combination means more ordinary income than planned, arriving into a withholding system that does not adjust for it. It also means a concentrated position that grew without you doing anything, and a set of decisions that feel optional right up until the calendar closes them.
Spring was too early to know your numbers. December is too late to do much with them. This quarter is the only stretch where you have both.
Move One: Decide About the Concentration, and Reserve for the Tax
Start with the mechanics, because they drive everything else.
Restricted stock units are taxed at vest. The fair market value of the shares on the vesting date is ordinary income on your W-2, whether or not you sell. That same value becomes your cost basis. From there, any further movement is capital gain or loss, short-term until you have held the shares more than one year measured from vesting.
That makes an appreciated position two separate decisions. The income tax on the vest is already determined. What remains open is whether to keep holding shares whose value now sits on top of a paycheck, a bonus, and a job that all depend on the same company. Selling enough to diversify and to fund the tax is a common answer, and whether it is your answer is a portfolio question that belongs with your financial advisor. What it costs is the part I can price.
If the position is underwater from its vest value, that is its own opportunity. Selling below vest-date value produces a capital loss. Net capital losses offset capital gains, and any excess is generally limited to $3,000 of deduction per year, with the rest carried forward indefinitely. In a year with other realized gains, that ordering matters.
Options work differently and should not be lumped in. Exercising a nonqualified option generally produces ordinary compensation income on the spread at exercise. An incentive stock option generally produces no regular taxable income at exercise but can create an alternative minimum tax adjustment, and its favorable treatment depends on holding the shares more than one year after exercise and more than two years after grant. If your situation includes ISOs, the 2026 AMT changes are the piece to read alongside this one, because the thresholds moved this year.
Move Two: Recalculate Withholding, Not Just Estimates
Most people know their withholding might be light. Far fewer know that the two ways of fixing it are not interchangeable, and that one of them expires with your last paycheck.
Start with why it is light. Supplemental wages, which include RSU vesting income and bonuses, are withheld at a flat 22% federally up to $1 million of cumulative supplemental wages in a year, and 37% above that. Meanwhile the 32% bracket begins at $201,775 of taxable income for a single filer and $403,550 for a married couple filing jointly, with 35% and 37% above that. If your marginal rate is 32% or higher, the default withholding on that income is short by ten points or more before state tax enters the picture.
Then add the two surtaxes people forget. The 0.9% Additional Medicare Tax applies once wages exceed $200,000 for single filers, $250,000 for joint filers, or $125,000 for married filing separately. The 3.8% net investment income tax applies to the lesser of your net investment income or the amount by which modified adjusted gross income exceeds those same thresholds, which means a large stock sale can pull it in. Neither of those thresholds is indexed for inflation, so more people cross them every year.
Here is the mechanic worth knowing. Estimated tax payments are credited when you actually make them, so a January payment does nothing about a shortfall that formed in the second quarter. Withholding is treated differently: amounts withheld from wages are generally treated as paid in equal installments across the year regardless of when they were actually withheld. Increasing withholding on your remaining paychecks through a new Form W-4 can therefore address a gap that opened months ago, in a way an estimated payment cannot.
Once your final payroll of the year runs, that tool is gone. That is the entire reason this is a fall conversation.
Know which safe harbor applies to you. Underpayment penalties are generally avoided by paying in at least 90% of the current year's tax, or 100% of last year's total tax, which rises to 110% if your prior year adjusted gross income exceeded $150,000. Most people with meaningful equity income are in the 110% group. Worth being precise here: that test looks at last year's AGI, not this year's income or the value of your shares. A safe harbor does not reduce what you owe. It buys you the ability to plan the rest deliberately instead of under penalty pressure.
If the mechanics of when payments are actually due are the confusing part, I wrote about that separately in why your tax quarters are not really quarters.
Move Three: Get the Elections Right on Future Awards
This one is about next year's grants, not this year's shares, and it contains the single most common misconception in equity compensation.
You cannot make an 83(b) election on restricted stock units. RSUs are a promise to deliver shares in the future, not a present transfer of property, so there is nothing to make the election on. The statute is explicit on the point. People bring this up constantly, usually because they read about someone saving a fortune with an 83(b), and the answer for an RSU holder is that this particular door does not exist.
Where the election does apply, the deadline is brutal. An 83(b) election is available for restricted stock awards, early-exercised stock options, and profits interests in an LLC. It must reach the IRS within 30 days of the transfer, and that deadline cannot be extended for any reason. The election accelerates taxation to the current value, which is attractive when that value is low and the expected appreciation is large. It is also generally irrevocable, and it provides no relief if the shares are later forfeited, which is the risk that makes it a real decision rather than an obvious one.
Private company employees have a narrower option. Section 83(i) can allow certain employees of private companies to defer income on qualified stock for up to five years. The requirements are strict: a written plan covering at least 80% of U.S. employees, exclusions for 1% owners, current and former CEOs and CFOs, and the four highest-compensated officers, and a 30-day election window. It is not a general RSU workaround, and most people who hear about it do not qualify. It is worth asking about if you are at a private company with a broad-based plan.
The practical takeaway is that this move costs nothing today. It just requires knowing, before a grant lands, which category it falls into and whether a 30-day clock is about to start.
A Few Other Things Worth Knowing
Loss harvesting and future vests can collide. If you sell company shares at a loss and additional shares of the same stock vest within 30 days before or after that sale, the wash sale rules can disallow the loss. On a monthly or quarterly vesting schedule, that window is easy to enter without noticing.
Appreciated shares can do double duty. Donating shares held more than a year to a qualified charity generally avoids the capital gain while supporting a deduction, though the 2026 charitable rules changed and now include a floor of 0.5% of AGI for itemizers and a cap on the value of itemized deductions for top-bracket taxpayers. Worth modeling rather than assuming.
Massachusetts residents have another layer. For 2026, taxable income above $1,107,750 carries an additional 4% on top of the state's 5% rate. A large vest, or a vest plus a sale, can cross that line for a single year.
Check the return, not just the plan. If you sold shares this year, the cost basis reported on your 1099-B is frequently wrong in a way that causes the same income to be taxed twice. I covered that trap in detail in invisible income and double taxation.
Dates Worth Circling
Early fourth quarter. The window for a year-end projection, while every tool below is still available.
Your last payroll of the year. The final chance to use additional withholding, the only fix that reaches backward across the year.
December 31. The line for realizing gains and losses in this tax year, and the last vest that counts toward this year's income.
January 15, 2027. The fourth quarter estimated payment deadline for 2026. Useful, but credited when paid rather than spread backward.
Frequently Asked Questions
What should I do with my RSUs at year end? The two questions worth answering are whether your withholding covers the income the vests created, and whether you want to keep holding a position that is now more concentrated than you planned. The first is a tax calculation with a deadline. The second is a portfolio decision with tax consequences.
Can I make an 83(b) election on RSUs? No. An 83(b) election requires a present transfer of property, and an RSU is a promise to deliver shares later, so there is nothing to elect on. The election is available for restricted stock awards, early-exercised options, and profits interests, and it must be filed within 30 days of transfer.
Is it better to increase withholding or make an estimated payment? They are not equivalent. Estimated payments are credited when made, while wage withholding is generally treated as paid evenly across the year. If your shortfall built up earlier in the year, extra withholding can address it in a way a fourth quarter estimated payment cannot, which is why it is worth using before your last paycheck.
What is the safe harbor for high income taxpayers? Generally 110% of your prior year total tax, if your prior year adjusted gross income exceeded $150,000. Paying in at least that much, or 90% of the current year's tax, generally avoids underpayment penalties. It does not reduce the tax itself.
Does selling my company stock trigger the 3.8% investment tax? It can. The net investment income tax applies to the lesser of your net investment income or the amount your modified adjusted gross income exceeds $200,000 for single filers, $250,000 for joint filers, or $125,000 for married filing separately. A large sale can push you across, and those thresholds are not adjusted for inflation.
When should I start year-end planning on equity compensation? Early in the fourth quarter. You need enough of the year's actual numbers to project accurately, and enough time left to act on the projection. By late December most of the useful levers have closed.
Where This Leaves You
A rally is a good problem, and it is still a problem. The shares are worth more, the tax on them is larger, the position is more concentrated than you chose, and none of that announces itself. Everything looks fine until April, when the only remaining decision is how to pay.
The three moves above are not complicated, and none of them require doing anything dramatic with your holdings. They require knowing your actual number while the year is still open, which is the whole reason the fourth quarter matters more than any other stretch of the calendar for someone with equity compensation.
If a liquidity event, a large vest, or a decision about concentration is anywhere on your horizon, that is the conversation worth having now rather than in the spring.
If something here hits close to home, get in touch.
This article was adapted from The Kindled Brief, a monthly newsletter on keeping more of what you earn. Subscribe here
Written by Kindled Planning: Light the way to your financial future.
A CPA-led personal CFO service helping equity compensation earners and entrepreneurs make confident, tax-smart financial decisions.
