Why your W-2 looks wrong (it isn't)
Box 1 is much higher than your salary, Box 5 is higher still, and Box 12 and Box 14 have codes you don't recognize. If you had RSUs vest during the year, that's normal. Here's what each box means.
Box 1: wages, tips, other compensation
Box 1 is your federal taxable wages: salary, bonus and the vest-day value of all RSUs that vested during the year, minus pre-tax deductions such as traditional 401(k) contributions and pre-tax health premiums. The RSU part isn't shown separately.
Example: a $180,000 salary plus $45,000 of RSU vests, with no pre-tax deductions, gives $225,000 in Box 1. The difference between Box 1 and your salary plus bonus is roughly your RSU income.
Box 12: what the codes mean
There's no Box 12 code for RSUs. If you only have RSUs, nothing in Box 12 relates to them. Common codes you may see:
- D: traditional (pre-tax) 401(k) contributions
- AA / BB: Roth 401(k) / Roth 403(b) contributions
- W: HSA contributions made through your employer, including your own pre-tax payroll contributions
- DD: cost of employer-sponsored health coverage (information only, not taxable)
- V: income from exercising non-qualified stock options (NSOs). It's already included in Box 1.
- Z: income from a nonqualified deferred compensation plan that failed Section 409A. Rare, and worth a call to a tax professional.
Incentive stock option (ISO) exercises don't appear on the W-2 at all; they're reported on Form 3921.
Boxes 3 and 5: Social Security and Medicare wages
Both include RSU income. Traditional 401(k) contributions reduce Box 1 but not Boxes 3 and 5, while pre-tax health premiums (Section 125) reduce all three. That's why Box 5 is often higher than Box 1.
Box 3 stops at the Social Security wage base: $184,500 for 2026. Box 4 is 6.2% of Box 3 (at most $11,439). Box 5 has no cap; Box 6 is 1.45% of Box 5, plus 0.9% Additional Medicare on wages above $200,000.
Box 2: federal income tax withheld
Box 2 is all federal income tax withheld during the year: your regular paycheck withholding plus the withholding at each vest, usually 22% of the vest value. It's one combined number.
If the RSU income fell in the 32%, 35% or 37% bracket, the 22% withheld at vest wasn't enough, and the difference shows up as tax due when you file. In the 24% bracket, the shortfall is small.
Boxes 16 and 17: state wages and tax
Box 17 includes state tax withheld at each vest. The rules vary by state. California withholds 10.23% on stock compensation, which is more than the 9.3% most tech salaries owe; its top rates of 12.3% and 13.3% only apply at much higher incomes. New York allows 11.70%. No-income-tax states like Texas and Washington show nothing here, because nothing is owed.
Box 14: other
Some employers list RSU income in Box 14 as information, labeled "RSU", "Stock Comp" or similar. That amount is already included in Box 1, so don't add it again. It should match the total vest value in your equity platform's tax documents.
What the W-2 doesn't tell you
- Whether enough was withheld. The W-2 shows what was withheld, not what you owe.
- How large the RSU shortfall is. You need your bracket for that.
- Whether you owe a penalty. If you owe $1,000 or more and didn't meet a safe harbor (90% of this year's tax, or 100% of last year's, 110% if last year's AGI was over $150,000), the IRS may charge an underpayment penalty.
- Anything about next year. The W-2 looks backward. Plan for upcoming vests separately.
How to check your RSU withholding
1. Download your equity platform's annual supplemental tax statement. It lists each vest, the value, and the taxes withheld. The total value should match the RSU part of Box 1.
2. Add salary, bonus and RSU income, subtract pre-tax deductions and your standard deduction ($16,100 single, $32,200 married filing jointly for 2026) or itemized deductions.
3. Apply the 2026 federal brackets and compare the result with Box 2.
4. Do the same for your state using Box 17.
Or enter your numbers in the calculator, which does steps 2 to 4 for each vest.
Example: an NVDA employee in New York
| Box | What it shows | Amount |
|---|---|---|
| 1 | Wages (salary + RSUs) | $250,000 |
| 2 | Federal tax withheld | Salary withholding + $11,000 (22% of the vest) |
| 3 | Social Security wages (capped) | $184,500 |
| 4 | Social Security withheld (6.2%) | $11,439 |
| 5 | Medicare wages (no cap) | $250,000 |
| 6 | Medicare withheld (1.45% + 0.9% above $200k) | $4,075 |
| 14 | RSU income (information only) | $50,000 |
| 16 | New York wages | $250,000 |
| 17 | New York tax withheld | Salary withholding + $5,850 (11.70% of the vest) |
What's actually owed on the RSUs: taxable income goes from $183,900 to $233,900, so the vest falls partly in the 24% and partly in the 32% bracket. Federal tax on it is $14,570, against $11,000 withheld: a −$3,570 shortfall. New York tax on the vest is about $4,619 (including New York's recapture rule), against $5,850 withheld: +$1,231. Net result: about −$2,339 due at filing from this vest. City tax would be extra for a New York City resident.