Paycheck Checkup After a Big Vest: What the IRS Reminder Still Means This Fall

Reviewed by Herman Schroeder, CFA

Educational article, not personal advice

As of October 24, 2026.

The short answer

On September 4, 2026 the IRS published IR-2026-105 for National Payroll Week. It asked workers to check federal withholding after a major life or income change, and pointed to the free Tax Withholding Estimator and Form W-4. That reminder still matters this fall. If restricted stock units (RSUs), options, or other company stock added a lot of wages this year, payroll may have withheld at the flat supplemental rate while your full-year rate sits higher. A fall checkup gives you time to fix W-4 withholding or estimated payments before the year closes.

What did the IRS say on September 4?

IR-2026-105 is short and practical. Federal income tax is generally paid as you earn. Employers withhold using your Form W-4. The IRS says check withholding after events such as starting or leaving a job, working more than one job, marriage or divorce, a birth or adoption, or a significant change in income. Use the Tax Withholding Estimator with recent pay statements. If you need a change, give a new Form W-4 to your employer, not to the IRS. Retirees with pension withholding can use Form W-4P the same way.

The rules it points to are the ones still in force for the rest of 2026.

Why does 22% withholding matter for RSU and company stock?

Employers often treat bonuses and similar pay as supplemental wages. Publication 15 for 2026 says the flat withholding rate on supplemental wages remains 22%, and becomes 37% when supplemental wages paid to an employee during the calendar year exceed $1 million. That 22% figure is an employer withholding rate. It is not a promise that your tax on the vest equals 22%.

Here is why that gap shows up for many high earners. For tax year 2026, IR-2025-103 lists these ordinary rates (among others):

  • 22% bracket: taxable income over $50,400 single / $100,800 married filing jointly. Source: IR-2025-103, Oct. 9, 2025.

  • 24% bracket: taxable income over $105,700 single / $211,400 married filing jointly. Source: IR-2025-103, Oct. 9, 2025.

  • 32% bracket: taxable income over $201,775 single / $403,550 married filing jointly. Source: IR-2025-103, Oct. 9, 2025.

  • 35% bracket: taxable income over $256,225 single / $512,450 married filing jointly. Source: IR-2025-103, Oct. 9, 2025.

  • 37% bracket: taxable income over $640,600 single / $768,700 married filing jointly. Source: IR-2025-103, Oct. 9, 2025.

If salary alone already puts you in the 32% or 35% bracket, a vest withheld at 22% can leave a shortfall on the federal income tax line even when payroll did everything by the book. We do not invent a dollar shortfall here. Run your own numbers in the estimator with your paystubs and expected vests.

Publication 15 also lists the 2026 Social Security wage base at $184,500 and the employee Medicare rate at 1.45% with no wage base limit. Those payroll taxes are separate from the income-tax rates above.

What should someone near retirement check?

IR-2026-105 is not only for people still in the office. The Tax Withholding Estimator page covers jobs and pensions or annuities with federal withholding. If you are drawing a pension, taking a large RMD next to other income, or still vesting company stock in a late-career grant, the same checkup applies. Use Form W-4P with a pension payer when the estimator says to change periodic withholding. Our retirees page is where we lay out how we think about those years.

Payroll withholding is a starting point, not your year-end answer. That is the plain view we keep coming back to when a big vest or bonus lands mid-year.

Questions to ask before year-end

  • Have I had a significant income change this year (RSU vest, option exercise, bonus, job change)?

  • What federal rate did payroll use on my supplemental wages, and how does that compare with the 2026 brackets above?

  • Have my supplemental wages for 2026 crossed, or will they cross, $1 million?

  • Have I run the Tax Withholding Estimator with my latest paystubs and remaining expected income?

  • Do I need a new Form W-4 (or Form W-4P), estimated payments, or both?

  • If I am near retirement, am I mixing pension withholding with other income that the W-4 alone never saw?

These are questions for a review of your household.

Frequently asked questions

When was this IRS reminder issued?
September 4, 2026, as IR-2026-105 for National Payroll Week. Source: IRS IR-2026-105.

What flat rates does Publication 15 give for supplemental wages in 2026?
22%, and 37% once supplemental wages paid to an employee during the calendar year exceed $1 million. Source: IRS Publication 15 (2026), What’s New.

Where do the 2026 ordinary brackets come from?
IRS news release IR-2025-103, October 9, 2025, and Revenue Procedure 2025-32. Source: IRS IR-2025-103.

Where do I change withholding?
Submit Form W-4 to your employer, or Form W-4P to a pension payer. Do not send those forms to the IRS. Source: IRS IR-2026-105 and the Tax Withholding Estimator page.

For multi-year tax framing around equity and year-end moves, see our tax planning page.

Sources

Sources checked October 24, 2026. Rates and forms can change. Check the IRS page for the year that applies to you.

Disclosures

This is general education, not advice on your return. It is not individualized tax or investment advice. Your results depend on your full tax situation, your employer’s payroll method, and changes in law or IRS guidance. Investing involves risk, including the possible loss of principal.

CFA® is a trademark owned by CFA Institute. Schroeder Capital Management, LLC is not affiliated with CFA Institute.