RSA vs RSU: How Restricted Stock Awards and Units Differ

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

The difference between an RSA and an RSU is when you own the stock. With a restricted stock award (RSA), shares are issued to you on the grant date and you forfeit them if you leave before they vest. With a restricted stock unit (RSU), you get only a promise of shares, delivered when each tranche vests, and you own nothing until then.

That timing drives the tax. Because an RSA is property from day one, you can file a Section 83(b) election within 30 days and be taxed on the grant-date value instead of the vest-date value. An RSU cannot use 83(b) at all. It is taxed as wages on the full value of the shares when they are delivered.

For most W-2 families in California and Washington, this question comes up in two places: a spouse at Apple, Amazon, Genentech or Gilead who holds RSUs, and a spouse who joins an early-stage startup and is offered restricted stock. The first involves no election. The second involves one irreversible decision with a 30-day clock.

RSA vs RSU at a glance

How RSUs are taxed (and why there is no 83(b) for RSUs)

An RSU is an unfunded, unsecured promise to deliver stock. Treasury regulations say a promise like that is not “property” for Section 83 purposes (Treas. Reg. §1.83-3(e)). Since 83(b) is an election about property you already hold, there is nothing to elect on. Any article telling you to “file an 83(b) for your RSUs” is wrong.

When RSUs vest and shares are delivered, the full market value is wages on your W-2. Your employer withholds federal tax at the supplemental rate, which for 2026 is an optional flat 22%, rising to a mandatory 37% on supplemental wages above $1,000,000 in the calendar year (IRS Publication 15). At our readers’ income, the real marginal rate is 35% or 37%, so 22% withholding usually leaves a balance due in April. Our guides on withhold to cover vs sell to cover and whether RSUs count as income walk through that gap.

In California the vest value is also subject to state income tax and to SDI at 1.3% of all wages for 2026, with no wage cap (EDD). Washington has no wage income tax in 2026, though WA Cares takes 0.58% of wages, and a new 9.9% income tax on AGI over $1,000,000 starts January 1, 2028 (WA DOR).

PSUs, ISOs and ESOPs are different again

• PSUs (performance stock units) are RSUs whose share count depends on company targets, such as revenue or relative stock return. Once earned and delivered, they are taxed like RSUs.
• ISOs are options: you pay a strike price to buy shares. Exercise is not regular income, but the spread can trigger AMT. See do RSUs have a strike price for the contrast.
• An ESOP is a retirement plan that holds employer stock for employees. It is not a grant you negotiate, and it follows retirement-plan rules, not Section 83.

How RSAs are taxed, with and without an 83(b) election

Restricted stock follows Section 83. Without an election, you recognize ordinary income as each tranche vests, equal to the value at vest minus anything you paid. With an 83(b) election, you recognize income once, at grant, on the value at grant minus anything you paid. Later growth is capital gain when you sell, and your holding period starts at grant instead of at vest (IRS Publication 525, “Restricted Property”; Treas. Reg. §1.83-4(a)).

The election is a written statement (or IRS Form 15620) filed with the IRS no later than 30 days after the shares are transferred to you. Publication 525 describes no extension. If you miss it, the decision is made for you.

Two details matter most:

• If you pay full fair market value for the shares at grant, the 83(b) income is zero. This is common at early startups. Filing costs nothing in tax and starts the capital gains clock.
• If you forfeit the shares later, the tax you paid on the 83(b) income does not come back. Publication 525 limits any loss to what you actually paid for the shares, minus anything you received.

For the mechanics of the filing itself, see how to draft a Section 83(b) election letter.

Worked example: a California family weighing an 83(b) on startup RSAs

Assumptions (illustrative, rounded): a married couple in San Mateo files jointly. One spouse is a physician; the other leaves a big-tech job for a Series A startup. Household taxable income is about $800,000 federal and $800,000 California before any equity income. The startup grants 40,000 RSAs worth $1.00 per share at grant, nothing paid, vesting evenly over four years. The family assumes the shares are worth $10 at each vest date and sells all 40,000 at $10 more than a year after the last vest. Federal figures are 2026; California figures use the 2025 rate schedule, the latest the FTB has published. These rates are held constant across every year of the example for simplicity. Social Security tax is ignored because both spouses are already above the 2026 wage base of $184,500.

Path A: no 83(b) election

Each year 10,000 shares vest at $10, adding $100,000 of wages.

• Federal: 37% bracket for 2026 (starts at $768,700 taxable, MFJ) = $37,000
• California (2025 schedule): $91,542 at 10.3% plus $8,458 at 11.3% = about $10,385
• Medicare 1.45% plus 0.9% Additional Medicare Tax = $2,350
• CA SDI 1.3% (2026) = $1,300
• Total per year: about $51,035. Over four years: about $204,140, all owed during the vesting years, before a single share is sold.

Path B: 83(b) election within 30 days of grant

At grant, $40,000 of wage income ($1.00 x 40,000 shares) at a combined marginal rate of about 50.95% (37% federal, 10.3% California, 2.35% Medicare, 1.3% SDI) = about $20,380.

At sale, the $360,000 gain ($400,000 minus the $40,000 already taxed) is long-term:

• Federal: 20% long-term capital gains rate plus 3.8% Net Investment Income Tax = $85,680
• California: no lower rate for capital gains, so ordinary rates apply. $91,542 at 10.3%, $268,458 at 11.3%, plus the 1% Behavioral Health Services Tax on the $160,000 of taxable income above $1,000,000 = about $41,365
• Total at sale: about $127,045. All-in: about $147,425.

What the numbers say

If the company does well, Path B costs about $56,700 less and pushes most of the tax to the year the family chooses to sell. If the spouse leaves in year one and forfeits the shares, Path B loses the $20,380 paid at grant with no deduction (nothing was paid for the shares), while Path A loses nothing. If the company fails, the $40,000 taxed at grant generally becomes a capital loss, which is worth far less than the tax paid at wage rates. The 83(b) is a bet on the company, sized by the tax at grant. At $1.00 a share, that bet is about 2.5% of the family’s taxable income. At $10 a share it would be more than $200,000, a very different decision.

The same family in Washington: Washington has no wage income tax in 2026, so Path A costs mainly Medicare and WA Cares. Under Path B, Washington’s 7% capital gains tax applies to long-term gains above the standard deduction ($278,000 for 2025, the latest published), or about $5,740 on this gain (WA DOR). The 83(b) case in Washington rests mostly on the federal gap between 37% wage rates and the 20% capital gains rate. This example’s later vests and its sale fall after January 1, 2028, when the new 9.9% tax on AGI over $1,000,000 begins, so the Washington math would change; how that tax interacts with the capital gains tax still awaits DOR guidance.

The decision your family actually has to make

If you hold RSUs, there is no RSA-vs-RSU choice and no election. Your decisions are about withholding, estimated payments, and how much single-company stock to keep after each vest. See how to calculate RSU value and whether to sell ESPP or RSU shares first.

If you are offered RSAs, answer four questions before day 30:

1. What is the taxable income at grant (value minus price paid)? If it is zero or small, filing is usually low-cost.
2. How much tax would you pay now, and could you lose that amount without changing your plans for the kids?
3. How likely is it that you leave before vesting? Forfeiture makes the 83(b) tax a sunk cost.
4. Is there a realistic path to selling the shares (acquisition, IPO, tender offer)? Low tax on paper means little if the shares cannot be sold for a decade.

Common mistakes with RSAs and RSUs

• Trying to file an 83(b) on RSUs. It has no effect. RSUs are taxed at delivery.
• Missing the 30-day window on RSAs because the grant paperwork arrived during a busy month. Put the deadline in both spouses’ calendars on the day of grant.
• Treating 22% RSU withholding as the tax. At a 37% federal bracket plus California, the gap shows up in April and can bring an underpayment penalty.
• Assuming California rewards long-term holding. It does not. The 83(b) benefit in California is the federal rate gap and the timing, not a state capital gains rate.
• Keeping vested RSUs by default. Holding vested shares is the same as buying your employer’s stock with that cash. Decide it on purpose.

What to document for your kids

An 83(b) election is a clear example of a decision your children will see only the result of: a large gain, or a check written for stock that went to zero. A one-page Decision Memo (the grant, the tax at stake, the odds you weighed, why you filed or didn’t) is the record that lets them understand the reasoning years later. As Kevin Luu, Co-Founder and Chief Learning Officer of Bright Advisers, puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.”

Frequently asked questions

Can I file an 83(b) election for RSUs?

No. An RSU is a promise to deliver stock later, and under Treas. Reg. §1.83-3(e) that promise is not property, so Section 83(b) does not apply. The election is available for restricted stock (RSAs) and for options exercised early into restricted shares. RSUs are taxed as wages at the value of the shares when they are delivered, usually at vest.

Are stock awards taxed as income?

Yes. RSUs are wages when shares are delivered. RSAs are wages when they vest, or at grant if you file an 83(b). In both cases the amount is the share value minus anything you paid, and it appears on your W-2. Gains after that point are capital gains when you sell, long-term if held more than a year.

Is an RSA better than an RSU?

Neither is better in general. An RSA can produce a lower total tax bill if the stock rises and you file an 83(b), but it can also cost you tax on shares you later forfeit. An RSU carries no upfront risk, but every dollar of value at vest is taxed at wage rates. The right answer depends on the company’s stage and your family’s ability to absorb a loss.

Next step

If you hold RSAs, find your grant date and count 30 days forward today. If you hold RSUs, compare last year’s withholding to your actual tax on the vest income. Our tax management and investment risk management pages explain how Age Five Family Office™ handles equity compensation for families, and the Tax & Wealth Assessment is there if you want a second look. This is general education, and the right move depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

Connect on LinkedIn →  · About Kevin