Equity Compensation · 15 min read
NVIDIA RSUs: Vesting, Leaving, and the Tax at Each Vest
NVIDIA RSUs vest on the schedule in your grant notice, generally over four years, and only while you remain in service; unvested units are forfeited when you leave, except on death, when they vest in full. Each vest is wages: payroll withholds shares at a flat 22% federal rate (37% above $1,000,000 of supplemental wages) and 10.23% for California, which leaves a household in the 35% or 37% bracket short $13,000 to $15,000 per $100,000 vested. Your basis is the vest-date value, which the 1099-B often omits.
NVIDIA restricted stock units are simple to describe and easy to get wrong at tax time. Each unit becomes one share on a vesting date set in your grant notice, the value of those shares is wages that day, and payroll withholds at a flat rate that rarely matches the tax the vest creates. Below: how the vesting schedule is set, what the RSU agreement says when you leave, go on leave or die, what is withheld at each vest and how far it falls short for a California household, the basis error that shows up on the 1099-B, and how the sell-or-hold decision fits inside NVIDIA’s closed trading windows. Figures are 2026 federal and 2025 California amounts; confirm your own numbers with a CPA or tax counsel.
How do NVIDIA RSUs vest?
On the schedule written in your grant notice, and only while you remain in service through each vesting date. NVIDIA’s form RSU agreement, filed with the SEC in 2024, leaves the schedule blank for each grant: the award “will vest as follows: __________,” subject to continuous service through each applicable vesting date (NVIDIA Global RSU Grant Notice and Agreement, Exhibit 10.1, Grant Notice and section 2(a)). The fiscal 2026 annual report adds only that, subject to certain exceptions, RSUs vest generally over four years subject to continued service (NVIDIA fiscal 2026 Form 10-K, Note 3, Stock-Based Compensation). Advisor websites widely report that recent grants vest quarterly on a front-loaded pattern of 40%, 30%, 20% and 10% across four years, on set Wednesdays in March, June, September and December. That pattern does not appear in any filing, so we treat it as reported rather than verified. Your grant notice governs, and grants made in different years can carry different schedules.
Three mechanics in the agreement matter more than the pattern:
- No pro-rata vesting. Service for part of a vesting period earns nothing if service ends before the vesting date; the agreement says so expressly (NVIDIA Global RSU Agreement, section 2(c)).
- Reduced hours reduce the award. If your regular time commitment falls after the grant date, the shares scheduled to vest afterward are reduced in proportion, rounded down to a whole share (section 2(d)(i)).
- No dividends on unvested units. Nothing accrues on an unvested unit for a cash or stock dividend, and nothing is paid on vested units awaiting issuance (section 7).
Shares are issued on the vesting date or as soon as practicable afterward, once withholding is settled, and in every case by the agreement’s issuance deadline, which is normally December 31 of the year the vest occurs (section 6(b)).
What happens to unvested RSUs when you leave, retire, take leave, or die?
Units that have not vested when your service ends are forfeited, with one exception: death. The table sets out what the form agreement provides for each event. The grant notice or the 2007 Equity Incentive Plan can add acceleration the form does not, so read yours.
| Event | What the agreement provides | Where |
|---|---|---|
| You resign or are terminated, for any reason other than death | Vesting stops on the termination date. Unvested units are forfeited and returned to NVIDIA at no cost, with no pro-rata credit for the partial period. | Sections 2(b) and 2(c) |
| You retire | The form agreement has no retirement provision. Retirement ends continuous service, so unvested units are forfeited unless your grant notice or the Plan provides otherwise. | Section 2(c) |
| You die while in service | The award becomes fully vested, as the grant notice provides. Acceleration occurs on the date of death or as soon as practicable, may be delayed until NVIDIA receives written notice from the executor, administrator or beneficiary, and the shares are issued by the issuance deadline. | Grant Notice; section 2(b) |
| You take an approved personal leave of absence | If the leave exceeds a duration set in NVIDIA’s Personal Leave of Absence Policy, vesting is suspended for a portion of the leave and the schedule is extended by that amount when you return. | Section 2(d)(ii) |
| Your regular hours are reduced | The unvested portion of the award is reduced in proportion to the change, rounded down to a whole share. | Section 2(d)(i) |
| NVIDIA is acquired or reorganized | The form agreement contains no change-in-control acceleration. It acknowledges that a reorganization can end your continuous service and, with it, the right to keep vesting; any protection would come from the Plan or your grant notice. | Section 9(b) |
Two consequences follow. First, the date service ends is a real number: a departure the day before a vesting date forfeits that tranche, and the agreement gives no credit for the months worked toward it. Second, shares already issued to you are yours. The insider trading policy applies to NVIDIA employees, board members, contractors and consultants (NVIDIA Insider Trading Policy, Exhibit 19.1 to the fiscal 2026 Form 10-K), so once you are no longer covered, its closed windows and hedging bans fall away, though the law against trading on material nonpublic information always applies.
How is tax withheld when NVIDIA RSUs vest?
By holding back shares. The agreement lets NVIDIA satisfy withholding by deducting from your pay, requiring a cash payment, arranging a same-day sale through a broker, or withholding shares from the vest, and it requires share withholding for officers unless that method is infeasible (NVIDIA Global RSU Agreement, section 10(b)). In practice NVIDIA withholds shares: in fiscal 2026 it withheld about 51 million shares worth $7.9 billion through net share settlements to cover the tax obligations on employee equity awards (NVIDIA fiscal 2026 Form 10-K, Item 5, Restricted Stock Unit Share Withholding). The insider trading policy allows that automatic share deduction to occur even during a closed window or while you hold material nonpublic information (NVIDIA Insider Trading Policy, Exceptions), which is why a vest settles on time in a quarter when you could not sell the remaining shares.
What is withheld is set by payroll rules, not by your bracket. Federal income tax on supplemental wages, which include RSU vests, is withheld at a flat 22% until an employee’s supplemental wages for the calendar year pass $1,000,000, after which the excess is withheld at 37% (IRS Publication 15 (2026), section 7, supplemental wages). California withholds 10.23% on bonuses and stock compensation paid separately from regular wages (EDD, California Employer’s Guide DE 44 Rev. 52 (4-26), supplemental wages), and California state disability insurance takes 1.3% of every dollar of wages, with no wage cap since 2024 (EDD, 2026 contribution and withholding rates, SDI). Medicare tax of 1.45% applies to all wages, plus the 0.9% Additional Medicare Tax on wages above $200,000 from one employer (IRS Publication 15 (2026), section 9, Additional Medicare Tax withholding).
The agreement is explicit that this may not be enough: your ultimate liability “may exceed the amount actually withheld,” and any under-withholding is yours to pay directly to the tax authority (sections 10(a) and 10(c)). It also allows NVIDIA to withhold by reference to statutory or maximum rates in your jurisdiction, so read each vest confirmation rather than assuming 22% (NVIDIA Global RSU Agreement, section 10(c)).
How large is the withholding gap on a NVIDIA vest?
Federally, 10 to 15 cents on every vested dollar for a household in the 32% to 37% brackets; in California, close to nothing until taxable income passes $1,000,000. The 2026 federal brackets reach 32% at $201,775 of taxable income single ($403,550 joint), 35% at $256,225 ($512,450) and 37% at $640,600 ($768,700) (IRS, tax year 2026 inflation adjustments (Rev. Proc. 2025-32)). California’s 2025 schedule reaches 9.3% at $72,724 single ($145,448 joint), 10.3% at $371,479 ($742,958), 11.3% at $445,771 ($891,542) and 12.3% at $742,953 ($1,485,906) (FTB, 2025 California tax rate schedules), plus 1% on taxable income over $1,000,000 (Cal. Rev. & Tax. Code §17043).
| Marginal rate on the vested dollars | Tax on $100,000 | Withheld | Shortfall |
|---|---|---|---|
| Federal 24% | $24,000 | $22,000 | $2,000 |
| Federal 32% | $32,000 | $22,000 | $10,000 |
| Federal 35% | $35,000 | $22,000 | $13,000 |
| Federal 37% | $37,000 | $22,000 | $15,000 |
| California 9.3% | $9,300 | $10,230 | $930 over-withheld |
| California 10.3% | $10,300 | $10,230 | $70 |
| California 11.3% | $11,300 | $10,230 | $1,070 |
| California 12.3% | $12,300 | $10,230 | $2,070 |
| California 12.3% plus the 1% surcharge | $13,300 | $10,230 | $3,070 |
The federal shortfall is largest for households whose vests are large enough to land in the 35% and 37% brackets while their supplemental wages stay under $1,000,000 for the year, because the 37% withholding rate applies only above that line. Past it, federal withholding catches up on the excess; California has no equivalent step.
A hypothetical Santa Clara household, worked through
A married couple filing jointly has $600,000 of taxable income from salaries and other sources before RSUs, which places them in the 35% federal bracket. During 2026, $400,000 of NVIDIA RSUs vest across the year’s vest dates. For the arithmetic, California taxable income is assumed equal to federal taxable income, which is rarely exact, and NVIDIA wages are assumed to already exceed $200,000 for the year. A preparer would reconcile both.
| Item, 2026 vests, hypothetical | Amount |
|---|---|
| RSU value at vest | $400,000 |
| Federal income tax on the vest: $168,700 at 35% (up to the $768,700 threshold) plus $231,300 at 37% | $144,626 |
| Federal income tax withheld at 22% | $88,000 |
| Federal shortfall | $56,626 |
| California tax on the vest: $142,958 at 9.3%, $148,584 at 10.3% and $108,458 at 11.3% (2025 joint schedule) | $40,855 |
| California income tax withheld at 10.23% | $40,920 |
| California shortfall | None ($65 over-withheld) |
| Medicare 1.45% plus 0.9% Additional Medicare Tax, withheld by payroll | $9,400 |
| California SDI at 1.3%, withheld by payroll | $5,200 |
| Shares withheld to cover all of the above | About 36% of the vest |
The household is about $56,600 short, nearly all of it federal, and the bill arrives with the April return unless it is paid during the year. Whether a penalty attaches turns on the estimated-tax safe harbors: withholding and timely estimates that reach 100% of last year’s tax, 110% if last year’s adjusted gross income exceeded $150,000, or 90% of this year’s (26 U.S.C. §6654(d)). How to close the gap during the year, with a W-4 change or quarterly payments, is covered in RSU withholding: why 22% falls short.
What is your basis, and why does the 1099-B understate it?
Your basis in each vested share is the value included in your wages that day, so a sale at vest produces little or no gain, and any later sale is measured from the vest-date price. The regulations set basis at the amount paid for the property plus the amount included in gross income (Treas. Reg. §1.61-2(d)(2)(i)). Because NVIDIA withholds shares rather than selling them, you are treated as having been issued the full number of shares even though some were held back for tax (NVIDIA Global RSU Agreement, section 10(c)): the W-2 shows the full vest value, and the withheld shares appear as tax paid, not as a sale.
The trap sits on the broker’s side. For equity compensation granted after 2013, a broker may not increase the basis it reports on Form 1099-B for the income you recognized at vesting (Treas. Reg. §1.6045-1(d)(6)(iii)), so the reported basis for RSU shares is often zero or blank. Filed as reported, the entire sale proceeds look like gain, and wages already taxed on the W-2 are taxed a second time. The correction is made on Form 8949: enter the basis the broker reported in column (e), enter code B in column (f), and enter the adjustment in column (g) so the gain reflects your true basis (IRS Instructions for Form 8949, columns (e), (f) and (g), code B). The vest confirmation from the plan administrator, not the 1099-B, is the record that carries the number, so keep every one.
Sell at vest or hold, inside NVIDIA’s closed windows?
The tax on the vest is the same either way. What differs is the concentration you carry afterward and when the policy lets you act. Because basis equals the vest-date value, selling on or near the vest date adds little or no gain, while holding starts a capital-gains clock and leaves the household’s exposure to one stock where it was. This is a framework question, not a view on the stock.
The policy sets the calendar. Employees NVIDIA designates may not trade or gift shares during the quarterly closed window, which begins five weeks before the end of the fiscal quarter and generally reopens on the second trading day after results are announced, other than under a 10b5-1 plan (NVIDIA Insider Trading Policy, Designated Individuals). NVIDIA’s fiscal year ends on the last Sunday in January (NVIDIA fiscal 2026 Form 10-K, Note 1, Fiscal Year), so quarter-ends fall in late April, July, October and January, and each window closes about five weeks before them. Everyone the policy covers is barred at all times from hedging (it names equity swaps, prepaid forward sale contracts, collars and straddles), short sales, margin and pledging (NVIDIA Insider Trading Policy, Blanket Prohibitions), so RSU shares cannot be collared or borrowed against while you work there. Trades under a 10b5-1 plan already in effect may execute during a closed window (NVIDIA Insider Trading Policy, Exceptions, 10b5-1 Trades); for an employee who is not an officer or director, a new plan cannot trade until 30 days after adoption (17 CFR §240.10b5-1(c)(1)(ii)(B)).
The agreement anticipates a vest inside a closed window. If the issuance date falls on a day you cannot sell, and NVIDIA elects not to withhold shares, not to permit a same-day sale and not to accept cash for the withholding, the shares are issued instead on the first business day you may sell (NVIDIA Global RSU Agreement, section 6(c)). Because share withholding is NVIDIA’s practice and the policy permits it in a closed window, the usual result is that the net shares arrive on schedule and the decision about selling them waits for the window, or runs through a plan.
Four frameworks holders use, none of them a recommendation:
- Sell at vest. Treat RSUs as cash compensation paid in shares: sell the net shares in the first open window after each vest, or through a 10b5-1 plan that sells a set number after each vest date. Gain is small and concentration does not grow.
- Sell a fixed fraction. A written rule, such as half of each vest, that does not change with the price.
- Hold to long-term, then sell on a schedule. Shares held more than a year qualify for long-term rates on the gain above the vest-date basis; the household accepts more concentration for that period.
- Give the lowest-basis lots. Long-held appreciated shares can be given rather than sold, within the charitable deduction limits; for designated employees, gifts in a closed window are limited to estate-planning transfers where you keep beneficial ownership (NVIDIA Insider Trading Policy, Exceptions, Gifts).
How those rules fit a whole balance sheet, and what opens up after you leave, is the subject of diversifying concentrated stock; the mechanics of a plan are in Rule 10b5-1 plans for employees.
What if you move from California to Texas before a vest?
California keeps the share of each vest earned by California workdays between grant and vest. A California resident on the vesting date owes California tax on the whole vest. A nonresident on the vesting date owes tax on the portion attributable to services performed in California, allocated by California workdays from grant to vest over total workdays in that period, under FTB Publication 1004 and the regulation it applies (FTB Publication 1004, section E, and Cal. Code Regs. tit. 18, §17951-5). A grant made in Santa Clara that vests two years after a move to Austin, with roughly half the workdays in each state, is roughly half California-source. That income is reported on a California nonresident return, and NVIDIA’s withholding may not track the split, so it is one more gap to size. Capital gain on a later sale belongs to the state of residence at the time of sale, and Texas has no personal income tax (Tex. Const. art. 8, §24-a). Residency is judged on closest connections, not a day count; the move itself is covered in California to Texas before a liquidity event.
How we approach NVIDIA RSUs in a plan
We start with the documents: the grant notices, the vest confirmations and the household’s return, so the schedule, the basis of every lot and the withholding gap are known numbers before the next vest date. From there, each vest gets a written rule that is tested against the whole household: cash needs, the year’s estimated payments, the share of net worth in one stock and, where a move is in the picture, the California-source fraction of each grant. That is the core of our work on equity compensation and concentrated stock, and the tax side runs through our tax planning process alongside the household’s CPA. We are fee-only, so the answer to sell-or-hold is never tied to a product.
Questions worth answering before the next vest
- What schedule does each of my grant notices set, and which vest dates remain?
- Am I a Designated Individual, and which of those dates fall inside a closed window?
- What was withheld at each vest this year, and what will the federal and California tax be at my real brackets?
- Do this year’s withholding and estimated payments reach a safe harbor?
- Does my broker’s 1099-B show the vest-date basis for shares I sold, or zero?
- What share of our net worth is NVIDIA stock today, and what is the written rule for the next vest?
- If I am considering leaving, which vest dates fall before and after the date I have in mind?
- If we moved from California, what fraction of each open grant is California-source?
What this does not mean
None of this is a recommendation to sell, hold or buy NVIDIA stock, and nothing here forecasts its price. The frameworks describe what holders do; which one fits a household depends on facts not on this page. The vesting terms summarized are from the form agreement NVIDIA filed in 2024; your grant notice, the 2007 Equity Incentive Plan and any later form can differ, and they control. Tax figures are 2026 federal and 2025 California amounts and change each year. Confirm your own numbers with a CPA or tax counsel.
Frequently asked questions
What is the NVIDIA RSU vesting schedule?
The one written in your grant notice. NVIDIA’s form RSU agreement leaves the schedule blank for each grant, and the fiscal 2026 annual report says only that RSUs vest generally over four years subject to continued service. The front-loaded quarterly pattern reported on advisor websites does not appear in any filing, so check the grant notice for each award before planning around a date.
What happens to my unvested NVIDIA RSUs if I leave?
They are forfeited on the date your service ends, for any reason other than death, and the agreement gives no pro-rata credit for the part of a vesting period you worked. Shares that already vested and were issued to you are yours to keep, sell or give, subject to the insider trading laws.
Do NVIDIA RSUs vest if I die?
Yes. Under the form grant notice and agreement, the award becomes fully vested if your service ends because of death. The acceleration occurs on the date of death or as soon as practicable, may wait until NVIDIA receives written notice from your executor, administrator or beneficiary, and the shares are issued by the agreement’s issuance deadline.
How much tax is withheld when NVIDIA RSUs vest, and is it enough?
NVIDIA withholds shares at a flat 22% federal rate (37% on supplemental wages above $1,000,000 in the year), 10.23% for California, 1.45% for Medicare plus 0.9% above $200,000 of wages, and 1.3% for California SDI. For a household in the 35% or 37% federal bracket that leaves $13,000 to $15,000 per $100,000 vested unpaid; California’s rate is close to right until taxable income passes $1,000,000.
Can I sell RSU shares during a closed trading window?
Not if you are a Designated Individual, other than through a 10b5-1 plan adopted earlier. The share withholding that covers tax at vest proceeds anyway, because the policy exempts it, so the net shares arrive and the sale waits for the window to reopen on the second trading day after results.
Does California tax my NVIDIA RSUs after I move to Texas?
Partly. For a vest after you become a nonresident, California taxes the fraction of the vest equal to your California workdays from grant to vest divided by total workdays in that period, under FTB Publication 1004. Later capital gain belongs to your state of residence when you sell, and Texas has no personal income tax.
Sources and further reading
- NVIDIA Corporation, Global Restricted Stock Unit Grant Notice and Global Restricted Stock Unit Agreement under the Amended and Restated 2007 Equity Incentive Plan, Exhibit 10.1, effective September 16, 2024: Grant Notice; sections 2, 6, 7, 9 and 10
- NVIDIA Corporation, Form 10-K for fiscal 2026 (year ended January 25, 2026): Item 5, Restricted Stock Unit Share Withholding; Note 1, Fiscal Year; Note 3, Stock-Based Compensation
- NVIDIA Corporation Insider Trading Policy, Exhibit 19.1 to the fiscal 2026 Form 10-K (last updated October 31, 2025): scope, blanket prohibitions, Designated Individuals closed window, exceptions for 10b5-1 trades, RSU share withholding and gifts
- IRS Publication 15 (2026), Employer's Tax Guide: section 7, supplemental wages; section 9, Additional Medicare Tax
- IRS, tax inflation adjustments for tax year 2026, including amendments from the One Big Beautiful Bill (Rev. Proc. 2025-32): 2026 rate brackets
- California EDD, California Employer's Guide DE 44 Rev. 52 (4-26): supplemental wage withholding, 10.23% on bonuses and stock options
- California EDD, contribution and withholding rates: 2026 SDI rate of 1.3% with no taxable wage limit
- California Franchise Tax Board, 2025 California tax rate schedules (Schedules X and Y)
- California Revenue and Taxation Code section 17043, 1% tax on taxable income over $1,000,000
- California Franchise Tax Board, Publication 1004, Equity-Based Compensation Guidelines (rev. 01/2015): section E, restricted stock, resident and nonresident on the vesting date
- Treas. Reg. section 1.61-2(d)(2)(i), basis of property received as compensation
- Treas. Reg. section 1.6045-1(d)(6)(iii), broker basis reporting for equity-based compensation granted or acquired on or after January 1, 2014
- IRS Instructions for Form 8949: columns (e), (f) and (g); code B for an incorrect basis on Form 1099-B
- 17 CFR 240.10b5-1(c)(1)(ii)(B), cooling-off periods for Rule 10b5-1 plans
- 26 U.S.C. 6654(d), required annual payment and estimated tax safe harbors
- Texas Constitution, Article 8, Section 24-a, prohibition of an individual income tax
Next steps
Keep reading
Get the weekly market brief.
Once a week, we send a concise roundup of the most important market stories and what they may mean for financial markets, portfolio decisions, and planning strategy.
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.