STRATEGIES FOR TECH EMPLOYEES
Tax Strategies for Tech Employees
RSUs, ISOs, and equity comp create unique tax challenges. Here are the strategies your CPA should be talking about.
Tech employees face a unique tax situation: high W-2 income, equity compensation (RSUs and ISOs) with withholding gaps, and complex capital gains from stock sales. The standard 22% supplemental withholding rate on RSUs leaves most tech workers with a surprise tax bill. Add ISOs with AMT exposure, concentrated stock positions, and high state taxes (especially in California), and the tax optimization opportunity is enormous.
Common mistakes tech employees make
- RSU withholding gap: withheld at 22%, taxed at 35-37%
- ISO exercise timing and AMT planning complexity
- Concentrated stock positions and capital gains tax on sales
- California's 13.3% state income tax with no bonus depreciation conformity
- Missing the mega backdoor Roth because HR never mentioned it
11 strategies for tech employees
Equity
RSU Withholding Gap
$5,000-$25,000
estimated annual savings
Equity
ISO Tax Planning
$10,000-$100,000
estimated annual savings
Retirement
Mega Backdoor Roth
$23,500-$46,000
estimated annual savings
Retirement
Backdoor Roth IRA
$7,000-$14,000
estimated annual savings
Investment
Tax-Loss Harvesting
$5,000-$50,000
estimated annual savings
Retirement
Health Savings Account (HSA) Strategy
$2,000-$5,000
estimated annual savings
Planning
Estimated Tax Payment Optimization
$2,000-$10,000
estimated annual savings
Investment
Net Investment Income Tax (NIIT) Planning
$3,000-$20,000
estimated annual savings
Planning
SALT Deduction
$3,000-$15,000
estimated annual savings
Vehicle
EV Tax Credit
Up to $4,000 (used EVs only)
estimated annual savings
Family
Dependent Care FSA
$1,500-$3,000
estimated annual savings
See which strategies apply to your equity and income
Answer 7 questions. See every strategy you qualify for, ranked by impact, explained in plain English, and ready to take to your CPA.
See my savings estimate →Takes 3 minutes · 50+ strategies analyzed · CPA-verified
Frequently Asked Questions
How are RSUs taxed?
RSUs are taxed as ordinary income at vesting. The full fair market value of the shares on the vesting date is added to your W-2. Your employer withholds at the 22% supplemental rate, but if you're in the 35-37% bracket, that creates a 13-15% withholding gap that becomes a surprise tax bill.
Should I exercise my ISOs before an IPO?
Often yes, if the FMV is still low. Early exercise reduces the AMT spread (FMV minus strike price) and starts the qualifying disposition clock. But the decision depends on your specific AMT exposure, liquidity needs, and risk tolerance. Model the numbers with your CPA before exercising.
Does my employer offer the mega backdoor Roth?
Check with your HR or benefits team. You need a 401(k) plan that allows after-tax contributions and in-plan Roth conversions. Most major tech companies (Google, Meta, Amazon, Apple, Microsoft) support this. It lets you contribute up to $46,000 extra per year into a Roth account.