Income & Work

What Are RSUs?

Restricted stock units (RSUs) are a form of equity compensation in which an employer promises to give an employee company shares once certain conditions are met, usually continued employment over a vesting schedule. When RSUs vest, the shares’ market value is generally taxed as ordinary income.

Vesting

A common schedule vests shares over four years, sometimes with a one-year cliff before any shares vest.

After Vesting

The value taxed at vesting becomes the cost basis; later gains or losses when selling are capital gains or losses.

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🔗 Related Terms

Vesting Employee Stock Options Cost Basis Total Compensation Employee Stock Purchase Plan (ESPP)

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.