Google RSUs (GSUs): How They Vest, Settle and Are Withheld

A Google Stock Unit is a restricted stock unit with a few features set by Alphabet’s plan and its filings: it settles in Class C shares, it carries dividend equivalents that vest with it, and the shares arrive net of the tax Alphabet withholds. Most of what an employee needs to decide follows from those three facts and from a trading window that depends on level. Below: how GSUs vest, what happens on a vest date, why the withheld shares rarely cover the tax, how dividend equivalents are taxed, the basis to record, and the sell-or-hold decision fitted to the window. Federal figures are for tax year 2026 and California figures are the 2025 rate schedules, the latest published; confirm your own numbers with a CPA or tax counsel. Google and Alphabet are named only to identify the plan discussed.

What is a Google GSU?

An RSU granted under the Alphabet Amended and Restated 2021 Stock Plan. Alphabet’s annual report describes the award in one sentence: “Under the Alphabet 2021 Stock Plan, an RSU award is an agreement to issue shares of our Class C stock at the time the award vests.” The same note says that RSUs “generally vest over four years contingent upon employment on the vesting date,” that they “are awarded dividend equivalents, which are subject to the same vesting conditions as the underlying award, and settled in Class C shares,” and that “shares are issued on the vesting dates net of the applicable statutory income tax withholding to be paid by us on behalf of our employees” (Alphabet Inc. Form 10-K for fiscal 2025, Note 11, Compensation Plans: Stock Plans). Alphabet reported 190,820 employees at December 31, 2025, and 534 million Class C shares reserved for future issuance under the plan.

What the filings do not say is how often a grant vests or how the four years are weighted. Whether your units land monthly, quarterly or annually, and whether more of the grant vests in the early years, is set by your grant agreement, and Google has changed the pattern over time. Some employees and third-party compensation sites describe front-loaded schedules for recent grants; we have not been able to verify a specific pattern from a primary source, so treat any schedule you read online as a description of someone else’s grant. Your own schedule is in the grant agreement and on the stock plan portal, and it is the only one that matters. Refresh grants issued in later years each carry their own schedule, so a tenured employee usually holds several grants vesting on overlapping calendars.

Class C or Class A: what did you receive?

Class C. Alphabet has three classes of stock: Class A, which trades as GOOGL and carries one vote per share; Class B, held by the founders and not publicly traded, with ten votes per share; and Class C, which trades as GOOG and has no voting rights except as required by law. The 10-K states that “the rights, including the liquidation and dividend rights, of the holders of our Class A, Class B, and Class C stock are identical, except with respect to voting” (Alphabet Inc. Form 10-K for fiscal 2025, Note 11, Stockholders’ Equity: Class A, Class B and Class C stock). For a holder that means the shares delivered at vest pay the same dividend and represent the same economic claim as Class A shares; they do not vote at the annual meeting. GOOG and GOOGL are separate listings and can trade at slightly different prices; nothing in this article is a view on either.

What happens on a vest date?

Three things, within a day or so of each other. The units convert to Class C shares. The value of those shares on the vest date is wages, reported on your W-2 with salary. And Alphabet withholds enough of the shares to cover the statutory withholding on that income, delivering the rest to your brokerage account. That last step is net share settlement: Alphabet keeps the withheld shares and remits the cash to the tax authorities on your behalf, so no sale is placed by you and the trading window does not enter into it (Alphabet Inc. Form 10-K for fiscal 2025, Note 11: shares issued net of statutory income tax withholding).

The withholding is built from several rates. For federal income tax, RSU income is a supplemental wage, and Publication 15 allows an employer to withhold at a flat 22% on supplemental wages until they exceed $1 million in the calendar year, after which the rate on the excess is a mandatory 37% (IRS Publication 15 (2026), section 7, Supplemental Wages). California’s Employment Development Department sets a flat 10.23% for “bonuses and stock options” paid separately from regular wages (California EDD, California Employer’s Guide DE 44 (2026), supplemental wages). Medicare tax of 1.45% applies to all wages, with a further 0.9% withheld above $200,000 from one employer, and Social Security tax of 6.2% applies only until wages reach the year’s wage base, which most Google employees pass before their larger vests (IRS Publication 15 (2026), section 9, Social Security and Medicare taxes). California State Disability Insurance is withheld at 1.3% in 2026 with no wage ceiling (California EDD, 2026 rates and withholding: SDI). Add those up for a California employee whose salary has already cleared the Social Security base and the shares withheld represent about 36% of the vest.

Why do the withheld shares not cover the tax?

Because the two income-tax rates in that stack are statutory withholding rates, not your rates. The 22% federal rate applies whether you are in the 24% bracket or the 37% bracket. For 2026 a single filer enters the 35% bracket at $256,225 of taxable income and the 37% bracket at $640,600; a married couple filing jointly enters 35% at $512,450 and 37% at $768,700 (IRS, tax inflation adjustments for tax year 2026 (Rev. Proc. 2025-32)). California’s 10.23% sits under the 11.3% bracket, which for a single filer runs from $445,771 to $742,953 of taxable income, and the 12.3% bracket above it (FTB, 2025 California tax rate schedules, Schedule X). A GSU vest lands on top of salary, so for most of the people it is paid to, the vest is taxed at the top of their income, and the shares withheld cover something less than that.

The gap is not an error, and Alphabet cannot fix it: the 22% is the rate the regulations allow an employer to use. It is an amount the household owes on its own, by April 15 or sooner through estimated payments. Our article on RSU withholding and why 22% falls short covers the estimated-tax safe harbors and the mechanics of closing the gap; the example below shows its size on one Google vest.

Hypothetical illustration: 1,600 GSUs vest

Hypothetical, for education only, in round numbers and with no real household. A single filer living and working in California earns $460,000 of salary and bonus in 2026 and has 1,600 GSUs vest during the year at an illustrative $100 a share, a figure chosen for arithmetic and not a view of the stock. The vest is $160,000 of wages. Salary has already passed the Social Security wage base, so no Social Security tax applies to the vest. Treated as the last income of the year, and after the 2026 federal standard deduction of $16,100, the household’s federal taxable income is $603,900, so the whole vest sits in the 35% bracket; California taxable income of roughly $614,000 puts the whole vest in the 11.3% bracket.

Hypothetical illustration. Rates: IRS Publication 15 (2026); California EDD DE 44 (2026) and the 2026 SDI rate; Medicare including the Additional Medicare Tax above $200,000. Shares withheld are rounded; the plan administrator handles fractions. Illustrative only, as of September 2026.

At vest: what Alphabet withholds on a $160,000 vest	Rate	Amount	Shares at $100
Federal income tax, supplemental rate	22%	$35,200	352
California income tax, stock compensation rate	10.23%	$16,368	164
Medicare, including the additional 0.9%	2.35%	$3,760	38
California SDI	1.3%	$2,080	21
Total withheld	35.88%	$57,408	About 574
Shares delivered to the brokerage account		$102,600	About 1,026

The Medicare and SDI lines are withheld at the correct rates and are settled. The two income-tax lines are not:

Hypothetical illustration. 2026 federal brackets from the IRS inflation adjustments for tax year 2026 (Rev. Proc. 2025-32); California from the 2025 rate schedules, Schedule X. The additional 1% California tax on taxable income over $1,000,000 does not apply here. Illustrative only; confirm your own figures with a tax professional.

The income-tax gap	Withheld at vest	Tax at the marginal rate	Shortfall
Federal	22% = $35,200	35% = $56,000	$20,800
California	10.23% = $16,368	11.3% = $18,080	$1,712
Total	$51,568	$74,080	$22,512

The household received about 1,026 shares worth $102,600 and owes $22,512 more than was withheld. Selling 226 of the delivered shares on the vest date, if the window is open, covers it; so does extra withholding on salary through Form W-4, or an estimated payment for the quarter in which the vest landed. What does not work is waiting for April without a reserve, because the underpayment penalty runs from the quarterly due dates, not from the filing date. For a couple filing jointly with the same income the federal figures shift with the brackets, and a household whose supplemental wages pass $1 million in a year sees federal withholding jump to 37% on the excess, which closes the federal gap on those dollars.

How are dividend equivalents taxed?

As wages, when the units they attach to vest. Alphabet pays a quarterly cash dividend on all three classes of stock; the Board raised it to $0.21 per share in April 2025, and $0.83 per share of dividends and dividend equivalents was declared for 2025 (Alphabet Inc. Form 10-K for fiscal 2025, Dividend Program and Consolidated Statements of Stockholders’ Equity). On unvested GSUs, the dividend is not paid in cash. It is credited as additional units, which the 10-K describes as “subject to the same vesting conditions as the underlying award, and settled in Class C shares.” When the grant vests, those extra units vest with it, are valued at the vest-date price, appear in the same W-2 wage figure, and are subject to the same net share settlement. Publication 525 states the general rule that dividends on stock that is still restricted are compensation rather than dividend income, reported by the employer on the W-2 (IRS Publication 525 (2025), Restricted Property: Dividends received on restricted stock).

The treatment changes the day after vest. Dividends on the shares you now own are dividend income, reported on Form 1099-DIV, and qualified for the lower capital-gains rates once you have held the shares for more than 60 days in the 121-day period that begins 60 days before the ex-dividend date (IRS Publication 550 (2025), Qualified Dividends: Holding period). In the illustration, 1,026 delivered shares at $0.21 a quarter produce about $215 a quarter, which is small next to the vest but is the first income from GOOG that the household controls the timing of: it can be reinvested, spent, or left as cash toward the tax reserve.

What basis do the shares carry, and what will the 1099-B show?

Basis is the vest-date value, which is the amount you were taxed on as wages (Treas. Reg. §1.61-2(d)(2)(i)). In the illustration, every one of the 1,600 shares has a basis of $100, including the 574 that Alphabet withheld. The withheld shares were, in effect, sold to the company at $100 on the vest date, so they produce no gain or loss; the 1,026 delivered shares carry $102,600 of basis, and every later change in price is a capital gain or loss measured from $100. The holding period starts at vest, and a lot sold more than a year later is long-term (26 U.S.C. §1222). Because the tax at vest is fixed by the vest-date price whether or not you sell, a sale on or near that date produces almost no additional gain.

The trap arrives the year you sell. Depending on the broker, the Form 1099-B may show no basis for the lot, or a basis that omits the wage income. The Form 8949 instructions handle both: when basis was not reported to the IRS, enter the correct basis in column (e); when an incorrect basis was reported, enter the reported figure in column (e), code B in column (f), and the correction in column (g) (IRS Instructions for Form 8949 (2025), columns (e), (f) and (g); code B). A lot reported with zero basis and left uncorrected taxes the vest-date value twice, once as wages and again as gain. Keep the vest confirmation for each lot, with the share count, the vest-date price and the number of shares withheld, for as long as you hold the shares.

Sell at vest or hold: how does the window change the answer?

The tax does not change the answer; the calendar can. The wages are taxed on the vest date whether you sell or not, so holding the delivered shares is economically the same as buying GOOG with after-tax cash on that day. Some households hold for reasons they can state; many sell on a schedule and treat each vest as cash pay. Either way, the question is how much of the household’s wealth should depend on one employer that already pays the salary, which is the subject of our article on diversifying concentrated stock. Alphabet’s policy narrows the tools: it prohibits short-term trading, short sales, hedging and other derivative transactions in Alphabet securities, pledging them as collateral, and holding them in margin accounts (Alphabet Inc. Policy Against Insider Trading, Exhibit 19.01 to the Form 10-K for fiscal 2024, prohibited transactions). Collars and prepaid variable forwards are therefore not available to a current employee; what remains is selling, giving, and a written plan.

The window is where Google differs from most employers. Under the Policy Against Insider Trading, filed as Exhibit 19.01 to the annual report, the window “opens on the second trading day following the public disclosure of Alphabet’s financial results” for everyone; for directors and employees at Level 8 and above it “ends at the close of market on the first trading day of the third calendar month” of the quarter, and for Level 7 and below it “ends at the close of market on the first trading day of the next fiscal quarter” (Alphabet Inc. Policy Against Insider Trading, Exhibit 19.01, trading windows). Alphabet reported fourth-quarter 2025 results on February 4, 2026 (Alphabet Inc. Form 8-K filed February 4, 2026), so the window opened on Friday, February 6, closed for Level 8 and above at the close on March 2, and stayed open for Level 7 and below until the close on April 1. Anyone holding material nonpublic information may not trade until the second trading day after it is public, and the company can impose special restriction periods.

A vest that lands inside a closed window becomes a hold you did not choose. A Level 8 director whose grant vests on March 25 cannot sell until the second trading day after first-quarter results in late April; a Level 7 engineer with the same vest date can sell until April 1. The way around the calendar is a plan set up in advance. The policy permits trades outside the window under Alphabet’s Employee Trading Plan program or a plan approved under its 10b5-1 Trading Plan Guidelines; SEC Rule 10b5-1 adds a cooling-off period before the first trade, 30 days for employees who are not officers or directors, and for officers and directors the later of 90 days or two business days after the next 10-Q or 10-K, capped at 120 days (SEC Rule 10b5-1, 17 CFR §240.10b5-1(c)(1)(ii)(B)). Our article on Rule 10b5-1 plans for employees covers the mechanics. Two smaller rules follow from the same policy: limit and stop orders may not be left open across a closed window, and bona fide gifts and donations are generally permitted only in an open one, which puts a year-end gift of shares to a donor-advised fund on the same clock as a sale.

Three frameworks fit the policy, and none is a recommendation for a particular household: sell each vest in the first open window after it lands; sell a fixed fraction of the position in every open window until it reaches a target weight; or set the sales in a trading plan that runs through closed windows. Level 8 and above have about three and a half weeks per quarter rather than eight, which is the usual reason a plan makes sense at that level.

What happened to GSUs in the 2023 reduction?

Unvested units are “contingent upon employment on the vesting date,” in the 10-K’s words, so a role that ends before a vest date ends the units that were due after it, unless the separation terms say otherwise. There is one public precedent. On January 20, 2023, Google announced a reduction of approximately 12,000 roles and described the U.S. package: pay through a notification period of at least 60 days, severance “starting at 16 weeks salary plus two weeks for every additional year at Google,” acceleration of “at least 16 weeks of GSU vesting,” payment of 2022 bonuses and remaining vacation, and six months of healthcare (Google, “A difficult decision to set us up for the future,” January 20, 2023). Later rounds and other countries have had their own terms, and nothing in that announcement binds a future one. The planning point is narrower: an unvested balance can be cut short, or partly accelerated, on a date you did not pick, and any accelerated vest is taxed and withheld like any other. A cash reserve sized to that possibility is the ordinary response, and it is separate from the tax reserve above.

What changes if you move from California to Texas?

California keeps a claim on vests that were partly earned there, and gives up the later gain. FTB Publication 1004 sources restricted-stock wage income to California by an allocation ratio: California workdays from grant to vest, divided by total workdays from grant to vest, applied to the vest-date income (FTB Publication 1004, section E, Restricted Stock: services performed within and outside California). Its own example is a Texas move: an employee who worked 700 days in California and 300 elsewhere between grant and vest owes California tax on 70% of the vest. Once you are a genuine nonresident, the capital gain on a later sale is sourced to your state of residence, and Texas has no personal income tax (Tex. Const. art. VIII, §24-a). In the illustration above, if 60% of the workdays between grant and vest had been in California, $96,000 of the $160,000 vest would be California-source wages reported on a nonresident return, and the rest, with any later gain, would be outside California’s reach. Residency is judged on the facts, and a move made shortly before a large vest invites a closer look; our article on moving from California to Texas before a liquidity event covers the residency test, the sourcing rules for each equity type, and the records to keep.

How we approach GSUs in a plan

We start with a grant-by-grant map: each grant’s remaining vest dates, the shares withheld at each vest, and the basis of every lot still held, in one schedule against the window for your level. That inventory is what makes a sell rule possible, and it is the first piece of our work on equity compensation and concentrated stock. Then each vest gets two numbers before it lands: the gap between what Alphabet will withhold and what the income will cost, and the share of the household’s net worth that GOOG will represent afterward.

The rule is tested against the rest of the household: the salary and bonus that set the bracket, the 401(k) and any after-tax contributions, the estimated payments the year requires, and the question of how much should depend on one employer. Our page for executives and equity compensation describes that coordination, and the tax side runs through our tax planning process with the household’s CPA. The tax should inform the sell decision without setting it, a trade-off we discuss in when tax planning distorts the portfolio.

Questions worth answering before the next vest

• What does my grant agreement say about cadence and weighting, and which vest dates fall in the next twelve months?
• What is my level, and on what date does my window close this quarter?
• Will the next vest land in an open window for me, or become a hold until the next one?
• What will Alphabet withhold on the vest, and what will the income actually cost at my bracket, federal and state?
• How will I cover the difference: a same-day sale, extra W-4 withholding, or an estimated payment, and by which due date?
• Do I have the vest confirmation for every lot I hold, with the vest-date price and the shares withheld?
• Has every 1099-B for a past GOOG sale been checked for missing or understated basis?
• What share of our net worth is Alphabet stock today, counting unvested units, and what ceiling have we set?
• Would an Employee Trading Plan or a 10b5-1 plan fit my level, and when could it first trade?
• If we moved from California, what share of each remaining grant’s workdays was spent there?

What this does not mean

Nothing here is a recommendation to sell, hold or buy Alphabet shares on any date, and nothing here is a view on the price of GOOG or GOOGL. The illustration uses round numbers chosen for arithmetic; the result for any household depends on filing status, other income, state of residence and the grant agreement itself, none of which we have seen. Alphabet’s plan and policy can be amended, and the versions cited are the ones on file with the SEC as of September 2026; your grant agreement and the policy govern. The Financial Sciences Company is not affiliated with, endorsed by or sponsored by Google LLC or Alphabet Inc.; the names identify the plan discussed. Confirm your own figures with a CPA or tax counsel.

Frequently asked questions

How do Google GSUs vest?

Alphabet’s 10-K says RSUs generally vest over four years, contingent on employment on each vesting date, and settle in Class C shares. The cadence, monthly, quarterly or annual, and any front-loading are set by the grant agreement rather than the filings, and Google has changed the pattern over time. Read your own grant agreement; schedules described online may not match it.

Why did I receive fewer shares than vested?

Because Alphabet settles GSUs net of statutory withholding. On the vest date it keeps enough shares to cover 22% federal income tax (37% once supplemental wages pass $1 million in the year), 10.23% California income tax for California employees, Medicare and, in California, SDI, and delivers the rest. No sale is placed by you, so the trading window does not affect it.

Why did I still owe tax in April after Google withheld shares?

The withheld shares cover the statutory rates, not your marginal rates. For 2026 a single filer is in the 35% federal bracket above $256,225 of taxable income and 37% above $640,600, against 22% withheld; California’s 11.3% and 12.3% brackets sit above the 10.23% withheld. On a $160,000 vest in the 35% and 11.3% brackets the shortfall is about $22,500. A same-day sale, extra W-4 withholding or an estimated payment closes it.

Are Google dividend equivalents taxed as dividends?

Not while the units are unvested. Dividend equivalents on GSUs are credited as additional units that vest with the grant and settle in Class C shares, so they are taxed as wages at the vest-date value and withheld like the rest of the vest. Dividends on shares you hold after vest are ordinary dividend income, qualified for the lower rates once the holding period is met.

What is the difference between GOOG and GOOGL shares from a GSU?

GSUs settle in Class C shares, which trade as GOOG and carry no voting rights except as required by law. Class A shares, GOOGL, carry one vote per share. Alphabet’s 10-K states that the liquidation and dividend rights of the two classes are identical; only the vote differs.

Does California still tax my GSUs after I move to Texas?

Partly. Under FTB Publication 1004, California taxes each vest as wages in proportion to the workdays spent in California between grant and vest, even if the vest arrives after you have moved. Once you are a genuine nonresident, the capital gain on a later sale is not California’s, and Texas has no personal income tax. Keep a workday count for every grant that straddles the move.

Sources and further reading

• Alphabet Inc., Form 10-K for the fiscal year ended December 31, 2025 (filed February 5, 2026): employees; Class A, B and C rights; Dividend Program; Note 11, Compensation Plans (RSU vesting, Class C settlement, dividend equivalents, net share settlement); exhibit index (Exhibit 19.01 incorporated by reference)
• Alphabet Inc., Policy Against Insider Trading, Exhibit 19.01 to the Form 10-K for fiscal 2024 (filed February 5, 2025): trading windows by level, Employee Trading Plan program and 10b5-1 Trading Plan Guidelines, prohibited transactions, limit orders, gifts
• Alphabet Inc., Form 8-K, fourth-quarter and fiscal 2025 results, filed February 4, 2026
• Google, A difficult decision to set us up for the future, January 20, 2023: roles reduced and U.S. severance terms including accelerated GSU vesting
• 17 CFR 240.10b5-1(c)(1)(ii)(B), cooling-off periods for Rule 10b5-1 plans
• IRS Publication 15 (Circular E), Employer's Tax Guide (2026): section 7, supplemental wages; section 9, Social Security and Medicare taxes
• IRS, tax inflation adjustments for tax year 2026, including amendments from the One Big Beautiful Bill (Rev. Proc. 2025-32): rate brackets and standard deduction
• IRS Publication 525 (2025), Taxable and Nontaxable Income: Restricted Property; Dividends received on restricted stock
• IRS Publication 550 (2025), Investment Income and Expenses: Qualified Dividends, holding period
• Treas. Reg. 1.61-2(d)(2)(i), basis of property transferred as compensation
• 26 U.S.C. 1222, long-term capital gain: capital asset held for more than one year
• IRS Instructions for Form 8949 (2025): basis not reported; incorrect basis, code B and column (g)
• California EDD, California Employer's Guide DE 44 (2026): supplemental wage withholding, 10.23% on bonuses and stock options
• California EDD, 2026 rates and withholding: SDI rate 1.3%, no taxable wage limit
• California FTB, 2025 California tax rate schedules, Schedule X
• California FTB Publication 1004, Equity-Based Compensation Guidelines (rev. 01/2015), section E, Restricted Stock, allocation ratio and Example 3
• Texas Constitution, Article VIII, Section 24-a, individual income tax prohibited

Next steps

• Planning for Google employees →
• Planning for executives and equity compensation →
• Rule 10b5-1 plans for employees →

Keep reading

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The views and opinions expressed here are those of The Financial Sciences Company as of the publish date and are provided for informational and educational purposes only. They are not personalized investment, tax, or legal advice. The Financial Sciences Company, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training. Additional information is available in our Form ADV at adviserinfo.sec.gov.

General educational information, current as of 2026. Figures and rules change. For guidance specific to your situation, speak with a qualified professional.