What a grant that pays most in its first two years means for spending, taxes, and savings.

For senior Google employees with equity compensation.

Executive Summary

Most senior Google employees think of their pay as one number: total compensation. The number is real, but it hides two features that can shape a household's finances more than the total does. GSUs can vest often, in some cases monthly, so they can feel like salary.¹ And newer grants were reported in 2022 to pay more in their first two years than in their last two.^1,2

Put together, those features create a quiet problem. Income that feels like salary can be spent or can pile up without a decision. Income that declines inside each grant can be mistaken for permanent. Meanwhile the 22% federal withholding rate on supplemental wages sits below the 32% to 37% brackets that apply at higher incomes,^3,4 and a few elections with deadlines deserve a look before the year closes.

This paper is educational. It predicts nothing about any company, any stock or any future pay decision. It describes commonly reported plan features and general tax rules, and it does not describe any individual's grant; your own grant agreement and plan documents control. Sources are listed at the end.

Questions and Answers

1. How do Google GSUs vest?

This paper treats pay in three forms: base salary, an annual cash bonus, and equity in the form of GSUs. A 2022 compensation overview described Google's compensation structure as three components: salary, bonus and equity.¹ GSUs are Google's stock unit awards, which turn into shares as they vest.¹ Alphabet's 2026 proxy statement describes pay that is primarily equity-based, with multi-year vesting of stock awards.⁵ In February 2022, press reports said Google had moved from grants vesting 25% a year to grants vesting 33% in year one, 33% in year two, 22% in year three and 12% in year four, and a 2022 compensation overview said most offers carried that schedule.^1,2 The same 2022 overview described earlier practice in which vesting frequency depended on grant size, from annual for the smallest grants to monthly for the largest.¹ Those reports are several years old, and they do not settle which grants carry which schedule today. Read the vesting table in your own grant agreement before relying on any published description, including this one.

2. What does a front-loaded vesting schedule mean for my pay in years 3 and 4?

It means a single grant pays you less each year after the second, even if nothing else changes. On the schedule reported in 2022, year three delivers two-thirds of what year one did, and year four delivers a little over one-third.² It is easy to anchor on the first two years, because those may be the years in which a household sets its mortgage, tuition and lifestyle. The later years are printed in the grant on day one. That makes them a planning input, and a household that builds its fixed spending on the year-four figure can treat everything above it as flexible.

3. Will refresh grants replace the GSU income that drops off?

Possibly, and that is the honest limit of what anyone outside your compensation review can say. A 2022 overview reported that most employees are eligible for refresh grants awarded in the year-end compensation cycle, with amounts set by managers from a recommended figure plus discretion.¹ Treat any refresh as unknown until it is awarded. A useful habit is to keep two income projections side by side: one that counts only grants already awarded, and one that adds an assumption about refreshes. Commit fixed expenses against the first. Let the second fund goals that can flex.

4. Why do I owe so much tax in April when Google already withheld on my GSUs?

Because the withholding rate and your tax rate are two different numbers. Restricted stock units are taxed as ordinary income, like wages, when they vest and are delivered.⁶ The federal withholding rate on supplemental wages is 22%, rising to 37% only when supplemental wages paid to an employee in a calendar year exceed $1 million.³ A married couple filing jointly reaches the 32% bracket above $403,550 of taxable income in 2026, the 35% bracket above $512,450 and the 37% bracket above $768,700.⁴ When GSU income lands in those brackets, the difference between the bracket rate and 22% is ten to fifteen cents on each dollar. The worked example below puts numbers on it.

5. Can I have more than 22% withheld from my GSUs?

Sometimes. Employer practice varies: in a 2025 industry survey reported by the National Association of Stock Plan Professionals, just under half of responding companies did not allow employees to request additional withholding on stock awards in any circumstances, and 7% allowed all employees to request it and told them so.⁷ Check your equity portal or ask your stock plan administrator what your plan permits. Where no election exists, the IRS describes two other routes: an additional amount withheld from each paycheck through Step 4(c) of Form W-4, or estimated tax payments.⁸ Timing matters, because a penalty may apply when too little tax is paid during the year through withholding and estimated payments.⁸ IRS Publication 505 states the general rule: estimated tax is generally not required when withholding and credits cover at least the smaller of 90% of the current year's tax or 100% of the prior year's tax, with 110% in place of 100% when prior-year adjusted gross income was more than $150,000 ($75,000 if married filing separately).⁸ This is worth ten minutes with your CPA each January, using the vests already scheduled.

6. Should I sell my GSUs when they vest or hold them?

Start with what vesting already did. You were taxed on the value of the shares, and the fair market value of the shares when they vested became your cost basis.⁶ Holding a vested share is therefore much like receiving a cash bonus and using it to buy your employer's stock that day. Some people would make that purchase and some would not, and either answer can be reasonable. The risk is having no answer, so that repeated vests add up to a large single-stock position nobody chose. A standing rule addresses that: a written percentage to sell at each vest and a destination for the proceeds, such as the tax reserve first, then savings goals, then a deliberate amount of company stock you intend to keep. Public companies maintain insider trading policies, which SEC rules require them to disclose each year,⁹ and a policy of that kind can limit when employees may trade. Your own company's policy controls when you can sell.

7. If I sell GSUs and buy an S&P 500 index fund, am I diversified?

More than before, and possibly less than you assume. Our companion paper, "The Concentration You Bought Back," found that the ten largest companies made up about 40% of the S&P 500 as of September 22, 2026, and that Microsoft, Amazon, Alphabet and Meta together were about 18%.¹⁰ Alphabet was among the ten largest weights on that date.¹⁰ So a portion of every dollar moved from GSUs into a fund tracking that index goes back into the stock you just sold, and more goes into other large technology companies. That is a fact about index construction and says nothing about where any stock is headed. It does mean the real measure of concentration is your total exposure: unvested GSUs, vested shares, index holdings and the paycheck itself.

8. Does Washington State tax my GSUs?

Washington does not currently have an individual income tax, so vesting itself carries no state income tax for a Washington resident today.¹¹ A later sale is different. Washington taxes the sale or exchange of long-term capital assets such as stocks at 7%, above a standard deduction that was $278,000 for 2025 and is adjusted for inflation each year.¹² Beginning with tax year 2025, the rate is 9.9% on taxable gains above $1 million.¹³ Because the value at vest becomes your cost basis, only the change in value after vesting is gain or loss on a later sale.⁶ Washington has also enacted a 9.9% income tax on annual adjusted gross income above $1 million, beginning January 1, 2028, with first returns due in April 2029; how it will apply to equity compensation is something to review with your CPA as guidance develops.¹¹ California is another matter. It taxes restricted stock unit income as wages on the vesting date, and for a nonresident it taxes that income to the extent services were performed in California between the grant date and the vesting date.¹⁴ A move north does not necessarily end the California filing, which is a point to consider with your CPA.

9. What is the mega backdoor Roth, and can I use it?

It is a nickname for a two-step strategy available only in plans that permit it. For 2026 an employee can contribute up to $24,500 to a 401(k) through elective deferrals, yet the overall limit on annual additions to a defined contribution plan account is $72,000.^15,16 Employer matching and nonelective contributions count toward that overall limit.¹⁷ Some plans accept after-tax contributions, and IRS guidance says after-tax contributions can be rolled over to a Roth IRA without also including their earnings.¹⁸ A plan may also allow in-plan Roth rollovers to a designated Roth account, though no plan is required to offer them.¹⁹ Earnings on after-tax contributions are pretax amounts,¹⁸ so how they are handled in a conversion is a tax question to consider with your CPA. Whether your plan offers after-tax contributions or in-plan conversion is a plan-by-plan question. Check your plan's summary description before assuming the strategy is open to you.

10. Is nonqualified deferred compensation worth using?

Where an employer offers one, a nonqualified deferred compensation plan is an arrangement to pay an employee compensation in the future, which can also defer the income tax on it.²⁰ The appeal is clear in a year when GSU income pushes the household into its highest bracket. The trade-offs are just as real. An initial deferral election must generally be made before the calendar year in which the pay is earned.²⁰ In an unfunded arrangement the employee has only the employer's promise to pay, and the money remains part of the employer's general assets,²⁰ which adds to the same single-company exposure discussed above. And deferring into a future year only helps if that year's rate turns out lower, which no one can know. Whether you are eligible and what your plan allows are questions for your benefits documents; whether to use it is a question for you and your CPA.

11. What should I know before a voluntary exit offer arrives?

In February 2026, HR Grapevine USA reported that Google had offered voluntary exits to US-based employees in selected roles within its global business organization.²¹ We mention it for one reason only: a decision like that can arrive with a deadline, and the numbers that matter take time to assemble. This paper says nothing about whether any similar offer will or will not be made. The preparation is the same either way. Know how many unvested GSUs you hold and what your grant agreement says happens to them when employment ends. Know how separation pay would be taxed and withheld, what happens to health coverage, to any deferred compensation balance and its payout schedule, and to your 401(k). A one-page summary kept current makes a deadline decision a calmer one.

A Worked Example

Hypothetical, for illustration only. This is not a real person, and the figures are assumptions chosen to show the mechanics. Results for any actual household will differ.

Assume a married couple in the Seattle area filing jointly. One spouse is a senior Google employee with a $330,000 salary, an annual cash bonus of $65,000 (assumed for illustration; an assumption about this household that does not describe any employer's bonus plan) and a single four-year GSU grant worth $1,200,000 at grant, vesting on the 33% / 33% / 22% / 12% schedule commonly reported in 2022.² To isolate the schedule's effect we assume the share price never changes, the bonus is the same in every year, there are no refresh grants, no other household income, no pre-tax 401(k) deferrals, and the couple takes the 2026 standard deduction of $32,200.⁴ Social Security and Medicare taxes are ignored. The 2026 brackets are applied to every year. The bonus is treated, like the GSU income, as supplemental wages withheld at the 22% federal rate.³

Table 1: Pay by Year — Salary, Assumed Bonus, and GSU Income From One Grant (Hypothetical, for Illustration Only)

Wages fall by $252,000 between year two and year four with no change in job, level or share price. That is 32% of the year-one figure.

Table 2: The Withholding Gap in Year 1 (Hypothetical, for Illustration Only)

The household's approximate federal income tax is $203,119 with the GSUs and bonus and $56,668 on salary alone, so the GSUs and bonus together add about $146,451 of tax, an effective rate of roughly 31.8% on that $461,000 of income against 22% withheld.^3,4 The gap shown covers GSU income and bonus together. It is about $45,031 for the year, or roughly $3,753 a month when spread evenly across the year. Nothing here is a penalty or an error. It is the ordinary result of a flat withholding rate meeting a graduated tax system, and it repeats every year in which GSU income is significant. The illustration assumes salary withholding exactly covers the tax on salary. Each step is shown in the Calculation Notes below.

Final Thoughts

Front-loaded grants and frequent vesting are neither good nor bad. They are design features, and they reward people who read the schedule early. The households that handle them well tend to do three plain things: they decide in advance what each vest is for, they reserve for tax at their real rate instead of the withheld rate, and they set fixed spending against income they have already been awarded.

"What is my total compensation?" is the question most people ask. A more useful one may be this: if no new grant arrived, what would my income be in each of the next four years, and which of my commitments would still fit?

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Sources

1. Levels.fyi, "Understanding Google's Compensation," September 5, 2022.
2. CFO Dive, "Companies speed up salary hikes, front load stock vesting," February 23, 2022, citing a Forbes report.
3. Internal Revenue Service, Publication 15 (Circular E), Employer's Tax Guide, for use in 2026.
4. Internal Revenue Service, News Release IR-2025-103, "IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill," October 9, 2025.
5. Alphabet Inc., Definitive Proxy Statement (Schedule 14A), filed April 24, 2026.
6. Charles Schwab, "RSU Taxes and PSU Taxes: A Guide," March 4, 2026.
7. National Association of Stock Plan Professionals (NASPP), Barbara Baksa, "Can You Accommodate Requests for Additional Tax Withholding?" February 18, 2026.
8. Internal Revenue Service, Publication 505, Tax Withholding and Estimated Tax, for use in 2026.
9. U.S. Securities and Exchange Commission, "Fact Sheet: Rule 10b5-1: Insider Trading Arrangements and Related Disclosure," December 14, 2022.
10. Ascent Wealth Solutions, "The Concentration You Bought Back," white paper, Fall 2026.
11. Washington State Department of Revenue, "Income tax," accessed October 6, 2026.
12. Washington State Department of Revenue, "Capital gains tax," accessed October 6, 2026.
13. Washington State Department of Revenue, Special Notice, "New tiered rates for Washington's capital gains tax," June 30, 2025.
14. State of California Franchise Tax Board, Publication 1004, "Equity-Based Compensation Guidelines," revised January 2015.
15. Internal Revenue Service, News Release IR-2025-111, "401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500," November 13, 2025.
16. Internal Revenue Service, Notice 2025-67, "2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living," November 2025.
17. Internal Revenue Service, "Retirement topics: 401(k) and profit-sharing plan contribution limits," page last reviewed April 8, 2026.
18. Internal Revenue Service, "Rollovers of after-tax contributions in retirement plans," page last reviewed February 26, 2026.
19. Internal Revenue Service, "Deadline extended to add new in-plan Roth rollover provisions," page last reviewed February 26, 2026.
20. Internal Revenue Service, Publication 5528, "Nonqualified Deferred Compensation Audit Technique Guide," revised March 2024.
21. HR Grapevine USA, "Google offers voluntary exits in business division as AI adoption intensifies," February 12, 2026.

Calculation Notes

All figures hypothetical, for illustration only.

Assumptions. Married filing jointly, Washington residents. Salary $330,000 in each year. Annual cash bonus $65,000 in each year, assumed for illustration and not a description of any employer's bonus plan, treated as supplemental wages withheld at 22%. Withholding on salary assumed equal to the tax on salary alone. One GSU grant with a grant-date value of $1,200,000. Vesting 33% / 33% / 22% / 12%. Share price unchanged from grant through all vest dates. No refresh grants, other income, pre-tax deferrals, credits or itemized deductions. 2026 standard deduction $32,200 and 2026 married-filing-jointly brackets applied to every year. Social Security, Medicare and Additional Medicare taxes ignored. No state income tax on wages.

Step 1. GSU income by year. Year 1: $1,200,000 × 0.33 = $396,000. Year 2: $1,200,000 × 0.33 = $396,000. Year 3: $1,200,000 × 0.22 = $264,000. Year 4: $1,200,000 × 0.12 = $144,000. Check: $396,000 + $396,000 + $264,000 + $144,000 = $1,200,000.

Step 2. Total wages. Salary + bonus + GSU income. Years 1–2: $330,000 + $65,000 + $396,000 = $791,000. Year 3: $330,000 + $65,000 + $264,000 = $659,000. Year 4: $330,000 + $65,000 + $144,000 = $539,000. Decline from year 2 to year 4: $791,000 − $539,000 = $252,000; $252,000 ÷ $791,000 = 31.9%, shown as 32%.

Step 3. Year 1 federal tax with GSUs and bonus. Taxable income: $791,000 − $32,200 = $758,800, below the $768,700 threshold for the 37% bracket, so the top rate applied is 35%. Tax by bracket totals $203,118.50.

Step 4. Year 1 federal tax on salary alone (without GSUs or bonus). Taxable income: $330,000 − $32,200 = $297,800. Tax by bracket totals $56,668.00.

Step 5. Tax attributable to GSUs and bonus. $203,118.50 − $56,668.00 = $146,450.50, shown as $146,451. Supplemental income: $396,000 + $65,000 = $461,000. Effective rate: $146,450.50 ÷ $461,000 = 31.77%, shown as 31.8%.

Step 6. Withholding on GSUs and bonus. $461,000 × 22% = $101,420.00 (GSUs $87,120.00; bonus $14,300.00). Total supplemental wages are below $1,000,000, so the 37% rate does not apply.

Step 7. Gap, GSUs and bonus combined. $146,450.50 − $101,420.00 = $45,030.50, shown as $45,031. Per month: $45,030.50 ÷ 12 = $3,752.54, shown as $3,753. Arithmetic reproduced by script; rounding to the nearest dollar in the tables.

IMPORTANT DISCLOSURES

This paper is intended for educational purposes and does not constitute tax, legal, or investment advice. Individual circumstances vary significantly. Please consult with a qualified tax or financial professional before making decisions. Hypothetical examples are for illustration only, do not represent any actual person or account, and are not a projection of any result. Ascent Wealth Solutions is not affiliated with, sponsored by or endorsed by Google LLC or Alphabet Inc. Plan features described in this paper are drawn from public reports and filings, may change at any time, and may not match the terms of any individual's grant or benefit plan; your own grant agreement and plan documents control. The company is named only to describe compensation features and this paper is not a recommendation to buy, sell or hold any security. Tax rules are described as understood in October 2026 and are subject to change. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit or protect against loss. Securities and Investment Advisory Services are offered through Osaic Wealth, Inc., member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth. Osaic Wealth does not offer tax or legal advice.