Estimated Tax Payments on RSUs, Stock Sales, and Roth Conversions: The 2026 Guide for High-Net-Worth Women

Written by Hazel Secco, CFP®, CDFA®

Estimated reading time: 17 minutes

“I owe $59K based on TurboTax.” That line comes from a tech-worker forum, and the poster’s explanation was the one I hear every spring: the federal withholding on her RSUs was set to 22 percent, and her actual rate was closer to 32. Another poster sold $200,000 of vested stock, owed the capital gains tax she expected, and then found an $8,000 underpayment penalty stacked on top of it.

At $2 million and up, this is rarely a single-vest problem. It is an RSU vest plus a concentrated stock sale plus a Roth conversion plus, some years, a deferred compensation payout, all landing in the same tax year with withholding designed for a paycheck. Estimated tax payments on RSUs and the other income that shows up alongside them are how you close that gap on purpose instead of discovering it in April.

This guide covers the 2026 rules: why employer withholding on equity falls short, the 110 percent safe harbor that high earners live by, the 7 percent penalty rate the IRS is charging this year, the 2026 deadlines, and the withholding move that lets you skip quarterly payments entirely. New Jersey, New York, and California each have their own version, and those are covered too.

Do I need to make estimated tax payments because of RSUs?

You need to make estimated payments, or add withholding, if your total federal payments for 2026 will fall short of a safe harbor: 90 percent of your 2026 tax, or 110 percent of your 2025 tax if your 2025 adjusted gross income was above $150,000. RSUs create the shortfall because employers withhold a flat 22 percent on the vest, and at your level the tax on that income is 35 to 37 percent, plus the 3.8 percent net investment income tax on anything you later sell at a gain.

Restricted stock units are taxed as ordinary wages on the day they vest, at the share price that day. Your employer reports the value on your W-2 and withholds against it. Under Treasury regulations, that withholding uses the optional flat supplemental rate of 22 percent on the first $1,000,000 of supplemental wages in a calendar year. Above $1,000,000, the rate becomes a mandatory 37 percent. Both rates apply regardless of what you wrote on your W-4, so you cannot fix the gap by asking for more withholding on the vest itself unless your employer uses a different method.

The arithmetic is what matters. A $350,000 vest for a woman already in the 37 percent bracket carries roughly $129,500 of federal tax. The 22 percent withholding covers $77,000. The remaining $52,500 is yours to pay, and the IRS expects it during the year, not the following April.

Why is 22% withholding on RSUs not enough?

The 22 percent rate is a payroll convenience, not an estimate of your tax. It was designed so employers could withhold on bonuses without running a full calculation, and it works acceptably for someone whose top bracket is 22 or 24 percent. For a single filer, the 24 percent bracket ends at $201,775 of taxable income in 2026 and the 37 percent bracket begins above $640,600. Add a $350,000 vest to a $400,000 salary and every dollar of that vest is taxed at 35 or 37 percent.

There is a second layer most people miss. The withholding gap on the vest is only the federal income tax. If you hold the shares and sell later, the gain is subject to capital gains tax and, above $200,000 of modified adjusted gross income for a single filer ($250,000 married filing jointly), the 3.8 percent net investment income tax. Neither has any withholding at all.

I tell clients to think of the 22 percent as a down payment. The balance is due on the IRS’s schedule, and that schedule is quarterly.

What is the safe harbor that avoids the underpayment penalty?

The federal safe harbor, in section 6654 of the tax code, says you owe no underpayment penalty if your withholding plus timely estimated payments equal at least 90 percent of your current-year tax or 100 percent of your prior-year tax. If your prior-year AGI was above $150,000 ($75,000 married filing separately), the prior-year figure rises to 110 percent. That $150,000 line has never been indexed for inflation, so nearly everyone reading this is in the 110 percent group.

For a woman with a large, unpredictable equity year, the 110 percent prior-year target is the one that matters. You know last year’s tax the moment your 2025 return is filed. You cannot know this year’s tax until December, because you do not yet know the share price on your November vest or whether you will sell the concentrated position. Paying 110 percent of last year’s tax, spread across the four deadlines, guarantees no penalty regardless of what 2026 turns into.

Two caveats. The prior-year safe harbor is only available if you filed a full-year return for 2025 with tax owed. And meeting the safe harbor does not mean you have paid enough; it means you have paid enough to avoid the penalty. The rest of the bill is still due April 15, 2027, and at this income level that balance can run well into six figures. Plan the cash for it.

Safe harbor test (federal, tax year 2026)	Requirement
Current-year test	Pay at least 90% of your 2026 total tax through withholding and timely estimates
Prior-year test, 2025 AGI of $150,000 or less	Pay at least 100% of your 2025 total tax
Prior-year test, 2025 AGI above $150,000	Pay at least 110% of your 2025 total tax
No penalty regardless	Balance due after withholding is under $1,000

What does the underpayment penalty cost in 2026?

The underpayment penalty is interest, charged at the IRS underpayment rate, on each quarterly shortfall from its due date until it is paid. For the third and fourth quarters of 2026 that rate is 7 percent (it was 6 percent in the second quarter). It is simple interest for this purpose, computed on Form 2210, not the daily-compounded interest that applies to a late balance after April 15.

At 7 percent, an $88,000 shortfall spread evenly across the four 2026 deadlines and paid with the return on April 15, 2027 produces a penalty of roughly $4,100. That is not ruinous. It is also entirely avoidable, and I would rather see that $4,100 in your account than the Treasury’s. The real cost of underpaying is usually the surprise, not the interest: a six-figure April bill that was never set aside.

Two things reduce or eliminate the penalty after the fact. Form 2210 Schedule AI, the annualized income installment method, lets you show the IRS that your income arrived late in the year (a December vest, a fourth-quarter stock sale) so the earlier quarters are not penalized for income you had not received yet. And a first-time penalty abatement request is worth making if your prior three years were clean.

Can I use withholding instead of estimated payments?

Yes, and for most of the women I work with it is the better tool. Under section 6654(g), federal income tax withholding is treated as paid evenly across all four quarters no matter when in the year it was actually withheld. Estimated payments only count from the date you send them. That difference is the whole strategy.

It means a large withholding in December counts as if one-quarter of it had been paid in April, June, September, and January. So a woman who realizes in October that she has underpaid can fix all four quarters at once with a single move:

Raise withholding on year-end pay. File a new W-4 in the fourth quarter with a large additional-withholding amount on line 4(c). Your employer withholds it from your remaining paychecks or your year-end bonus. This works because regular wages use the W-4; it is the flat-rate RSU withholding that ignores it.

Withhold on a retirement account distribution. If you are over 59½, you can take a distribution from an IRA and elect 100 percent federal withholding on it, then replace the money within 60 days from cash. The withholding is deemed paid evenly through the year. This is an advanced move that has to be executed correctly (the 60-day rollover is once per 12 months across all your IRAs), so it belongs in a conversation with your advisor and CPA, not in a Saturday-afternoon experiment.

Withhold on a Roth conversion. You can have tax withheld from the conversion itself. I generally advise against it, because every dollar withheld is a dollar that does not make it into the Roth, and the conversion is the point. Pay the conversion tax from cash, through a quarterly estimate or year-end withholding, so the full amount converts.

What about stock sales, Roth conversions, and deferred comp?

Every one of these creates federal tax with zero withholding, and each one lands on the estimated tax schedule the quarter it happens. Selling $300,000 of appreciated company stock in March triggers capital gains tax and net investment income tax due by June 15. A $100,000 Roth conversion in September adds $37,000 of ordinary tax at the top bracket, due by January 15. A deferred compensation payout is wages, so it does get withheld on, but often at the same 22 percent supplemental rate that leaves RSUs short.

The 20 percent long-term capital gains rate begins above $545,500 of taxable income for a single filer in 2026 ($613,700 married filing jointly). If your salary and vests already put you past that line, every dollar of gain on the concentrated position is taxed at 20 percent plus 3.8 percent. That is 23.8 percent with no withholding, before state tax.

The practical rule: any time a single event adds more than about $50,000 of income with no withholding, recompute the safe harbor that week, not at year end. Your Wealth Blueprint™ should carry a running estimate of the 2026 tax and the payments made against it, updated after every vest, sale, and conversion. That running total is what tells you whether the fix is a quarterly payment now or a W-4 change in November.

A worked example: Elena’s 2026

Elena is a hypothetical composite. She is 54, a vice president at a pharmaceutical company in New Jersey, single, and has $2.4 million invested. In 2026 she earns a $400,000 salary, has $350,000 of RSUs vest, sells $300,000 of appreciated company stock (all long-term gain), and converts $100,000 from a traditional IRA to a Roth.

Her 2026 federal picture, using the 2026 brackets and the $16,100 standard deduction:

Item	Amount
Ordinary income (salary + RSU vest + Roth conversion)	$850,000
Tax on ordinary income, 2026 single brackets	$264,500
Long-term capital gain, taxed at 20%	$60,000
Net investment income tax, 3.8% on the $300,000 gain	$11,400
Additional Medicare tax, 0.9% on wages above $200,000	$4,950
Total 2026 federal tax	$340,850
Withholding on salary (W-4, assumed)	$110,000
Withholding on RSU vest at 22%	$77,000
Total withheld	$187,000
Balance due April 15, 2027	$153,850

Whether she owes a penalty depends on 2025, not 2026. If her 2025 total tax was $160,000, her 110 percent safe harbor is $176,000, her $187,000 of withholding already clears it, and she owes no penalty. She simply needs $153,850 in cash on April 15, 2027, which is the conversation we have in October so it is not a surprise.

If instead her 2025 tax was $250,000, the safe harbor is $275,000, she is $88,000 short, and the penalty at 7 percent is about $4,100. The fix is a W-4 change in October adding $88,000 of withholding across her last six paychecks and year-end bonus, which the IRS treats as paid evenly all year. No quarterly payments, no Form 2210, no penalty.

This is the kind of coordination I describe in the Executive Woman’s Tax Playbook: the tax decisions that happen in October and November, when the year is still open, are worth more than anything that happens in April.

What are the 2026 federal estimated tax deadlines?

Installment	Income period covered	Due date
1st	January 1 to March 31, 2026	April 15, 2026
2nd	April 1 to May 31, 2026	June 15, 2026
3rd	June 1 to August 31, 2026	September 15, 2026
4th	September 1 to December 31, 2026	January 15, 2027

You can skip the January 15, 2027 payment if you file your 2026 return and pay the full balance by January 31, 2027. Payments go through IRS Direct Pay or EFTPS; keep the confirmation numbers, since Form 2210 asks for payment dates.

How do New Jersey, New York, and California handle this?

Each state runs its own estimated tax system with its own safe harbor, and state tax on a $350,000 vest is not small. New Jersey charges 10.75 percent on taxable income above $1,000,000. New York State charges 9.65 percent above $1,077,550 for a single filer, rising to 10.9 percent at the very top, and New York City residents add up to 3.876 percent. California’s top rate is 13.3 percent: 12.3 percent plus the 1 percent tax on taxable income above $1,000,000. None of them are withheld at those rates on a vest.

Rule, tax year 2026	New Jersey	New York State	California
Estimates required if you expect to owe	More than $400	$300 or more (tested separately for NYS, NYC, and Yonkers)	$500 or more ($250 MFS)
Prior-year safe harbor	100% of 2025 tax (no 110% tier)	100% of 2025 tax; 110% if 2025 NY AGI over $150,000	100% of 2025 tax; 110% if 2025 CA AGI over $150,000
Current-year safe harbor	80% of 2026 tax	90% of 2026 tax	90% of 2026 tax; mandatory if 2026 CA AGI is $1,000,000 or more (no prior-year option)
Installment pattern	Four equal payments	Four equal payments	30% / 40% / 0% / 30% (nothing due in September)
Fourth-quarter payment excused if return filed and paid by	February 15, 2027	January 31, 2027	January 31, 2027

Two of these deserve attention. California’s $1,000,000 test is measured on the current year’s AGI, so a woman whose 2026 income crosses that line because of a stock sale loses the prior-year safe harbor entirely and has to hit 90 percent of the actual 2026 tax. And New Jersey’s 80 percent current-year test is more forgiving than the federal 90 percent, which is why an NJ resident can sometimes be safe for state and short for federal in the same year. If you live in New Jersey and work in New York, both states are in play; that cross-border situation is one we handle for our New York clients every year.

California also requires electronic payment once any single estimate exceeds $20,000 or your total tax liability exceeds $80,000, with a 1 percent penalty for paying by check after that.

What to Do This Week

Pull your 2025 total tax and multiply by 1.1. That is your federal safe harbor number for 2026. It is on line 24 of your 2025 Form 1040. Write it down; every decision below runs against it.

Add up what has been withheld so far. Year-to-date federal withholding on your most recent pay stub, plus the withholding shown on any RSU vest statements, plus any estimates already paid. Compare it to the safe harbor number and to a rough estimate of your actual 2026 tax.

List the events still to come this year. Remaining vest dates and their expected values, any planned stock sale, any Roth conversion, any deferred comp payout. Each one either has no withholding or 22 percent withholding, and each one moves the number.

Decide the fix: quarterly payment, or W-4 change. If you are short, a new W-4 with an additional amount on line 4(c) spreads the fix across the whole year under section 6654(g). If the shortfall is large or the year is almost over, make an estimated payment by the next deadline and note the date.

Check your state separately. New Jersey, New York, and California each have their own thresholds and safe harbors above. A resident of a high-tax state with a large vest is usually underpaid at the state level even when federal is fine.

Frequently Asked Questions

Does the 37% withholding above $1 million fix the problem for large vests?

Only on the portion above $1,000,000 of supplemental wages in the calendar year. The first $1,000,000 is still withheld at 22 percent. A woman with $1.4 million of vests in 2026 has 22 percent withheld on the first million and 37 percent on the last $400,000, which still leaves her roughly $150,000 short on the first million at a 37 percent marginal rate.

Do I have to pay estimated taxes on a Roth conversion?

The conversion adds ordinary income with no withholding unless you elect it, so yes, the tax is due on the estimated schedule for the quarter you convert. Most people are better off paying that tax from cash, through a quarterly estimate or year-end W-4 withholding, rather than withholding from the conversion itself, so the full amount lands in the Roth.

Sold stock with a large capital gain. Do I need to pay estimated taxes?

If the gain pushes your total payments below the safe harbor, yes, by the deadline for the quarter in which you sold. Long-term gains above $545,500 of taxable income (single, 2026) are taxed at 20 percent plus 3.8 percent net investment income tax, with no withholding. Selling in January gives you until April 15; selling in December gives you until January 15.

What happens if I don’t pay enough estimated tax?

The IRS charges an underpayment penalty on each quarterly shortfall at its underpayment rate, 7 percent for the second half of 2026, from the due date until paid. You calculate it on Form 2210. If your income arrived unevenly, Schedule AI (the annualized method) can reduce or remove the penalty for the early quarters.

Can I ask my employer to withhold more than 22% on RSUs?

Usually not on the vest itself. When an employer uses the flat supplemental rate, the regulations require it to ignore your W-4, including additional-withholding requests. Some plans allow a higher sell-to-cover election (a choice Meta employees know well), and some employers use the aggregate method instead, but the reliable fix is extra withholding on your regular paychecks through line 4(c) of a new W-4.

Are estimated tax payments the same as the tax on my RSUs?

No. Estimated payments are how you prepay tax that is not being withheld. The tax on your RSUs is set by your bracket; the estimate is the mechanism that gets it to the IRS on time. Withholding on the vest covers part of the tax, and estimates or extra W-4 withholding cover the rest.

Want the full picture?

If you want the complete breakdown, including the three advisor compensation models, why tax preparation isn’t tax planning, and the four questions every high-earner should ask her advisor, download my free guide, 7 Things Nobody Teaches Independent Women About Building Wealth. It’s a 15-minute read.

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Hazel Secco, CFP®, CDFA®, is the founder of Align Financial Solutions, a fee-only fiduciary wealth management firm for high-net-worth women with complex financial lives: retirement, equity compensation, tax, and estate as one coordinated plan.

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Advisory services are offered through Align Financial Solutions LLC, an investment advisor in the State of New Jersey. This article is for educational purposes only and is not personalized tax, legal, or investment advice. Tax figures are current for tax year 2026 and subject to change. Elena is a hypothetical composite, not a real client, and her figures are illustrative. Consult a qualified tax professional about your own situation.

Sources

1. 26 U.S. Code § 6654, Failure by individual to pay estimated income tax (safe harbor, due dates, annualized method, withholding deemed paid evenly): https://www.law.cornell.edu/uscode/text/26/6654
2. 26 U.S. Code § 6622, Interest compounded daily (exclusion of the § 6654 addition): https://www.law.cornell.edu/uscode/text/26/6622
3. IRS, Interest rates remain the same for the fourth quarter of 2026 (IR-2026-98; Rev. Rul. 2026-15): https://www.irs.gov/newsroom/interest-rates-remain-the-same-for-the-fourth-quarter-of-2026
4. IRS, Quarterly interest rates: https://www.irs.gov/payments/quarterly-interest-rates
5. IRS, Instructions for Form 2210, Underpayment of Estimated Tax by Individuals: https://www.irs.gov/instructions/i2210
6. IRS Publication 15 (2026), supplemental wage withholding rates: https://www.irs.gov/publications/p15
7. 26 CFR § 31.3402(g)-1, Supplemental wage payments: https://www.law.cornell.edu/cfr/text/26/31.3402(g)-1
8. IRS, Tax inflation adjustments for tax year 2026 (Rev. Proc. 2025-32): https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
9. Internal Revenue Bulletin 2025-45, Rev. Proc. 2025-32 (2026 capital gains thresholds): https://www.irs.gov/irb/2025-45_IRB
10. 26 U.S. Code § 1411, Net investment income tax: https://www.law.cornell.edu/uscode/text/26/1411
11. IRS, Large gains, lump-sum distributions, etc. (estimated tax FAQ): https://www.irs.gov/faqs/estimated-tax/large-gains-lump-sum-distributions-etc/large-gains-lump-sum-distributions-etc
12. New Jersey Division of Taxation, 2026 Form NJ-1040-ES instructions (estimated tax rules and rate schedule, 10.75% above $1,000,000): https://www.nj.gov/treasury/taxation/pdf/current/1040esi.pdf
13. New Jersey Division of Taxation, GIT-8, Estimating Income Taxes: https://www.nj.gov/treasury/taxation/pdf/pubs/tgi-ee/git8.pdf
14. New York State Department of Taxation and Finance, Form IT-2105-I (2026), estimated tax rules and 2026 rate schedules: https://www.tax.ny.gov/pdf/current_forms/it/it2105i.pdf
15. California Franchise Tax Board, 2026 Form 540-ES instructions (estimated tax rules and 1% tax on taxable income above $1,000,000): https://www.ftb.ca.gov/forms/2026/2026-540-es-instructions.html
16. California Franchise Tax Board, 2025 Tax Rate Schedules (12.3% top bracket): https://www.ftb.ca.gov/forms/2025/2025-540-tax-rate-schedules.pdf
17. California Franchise Tax Board, Mandatory e-Pay: https://www.ftb.ca.gov/pay/mandatory-e-pay.html
18. Forum quotes: Blind, Massive amount of tax owed: https://www.teamblind.com/post/massive-amount-of-tax-owed-5fyxz7q4 and Underpayment penalty from long-term cap gains: https://www.teamblind.com/post/underpayment-penalty-from-longterm-captains-hgvfqxks