If you’ve received restricted stock units (RSUs), it’s very natural to ask: When does the capital gains holding period begin? That “start date” can affect whether any future profit is taxed as short-term or long-term.
The big picture: grant vs. vest
An RSU grant is typically a promise of future shares, not actual ownership today. In other words, you generally don’t have the shares in hand (and can’t sell them) until they vest.
That’s why the holding-period question usually comes down to: When did you actually receive the shares?
In many cases, the clock starts at vesting (when shares are delivered)
For many RSU plans, the holding period for capital gains purposes generally begins when the RSUs vest and the shares are transferred/delivered to you—because that’s when you become the owner of the shares.
At vesting, two important things often happen:
- The value of the shares at vesting is commonly treated as taxable compensation (often reported on your W-2, depending on your situation).
- That same value often becomes your cost basis for measuring future capital gain or loss.
Sources: IRS Publication 525, Taxable and Nontaxable Income (rev. 2024) discusses restricted property and compensation income concepts; IRS Publication 550, Investment Income and Expenses (rev. 2024) explains capital gains, basis, and holding periods.
Short-term vs. long-term: the one-year threshold
After the holding period begins:
- Selling within one year typically results in short-term capital gain/loss.
- Selling after more than one year typically results in long-term capital gain/loss.
(Your exact dates can be nuanced, so it’s worth confirming based on your brokerage records and tax reporting.)
A quick example
Say your RSUs vest on March 1 when the stock is $50/share. If you sell later at $65/share:
- The $50/share at vesting is commonly treated as compensation income.
- Your basis is often $50/share.
- The $15/share increase is typically a capital gain.
- Whether it’s short- or long-term depends on how long you held the shares after vesting.
Planning takeaway (and how we can help)
I hear this question a lot because RSUs can feel like a “two-layer” tax event: income at vesting and then capital gains/losses after. The right strategy often depends on your bigger picture—cash-flow needs, concentration risk in employer stock, and goals like retirement timing.
If you’d like, we can review your vesting schedule, your employer plan documents, and your most recent paystub/brokerage statements so you feel confident about what dates matter and what options you have.