2025 Tax Bracket Tweaks: What LA Tech Professionals Should Know About Their RSUs and Stock Plans

When the IRS released its 2025 inflation adjustments last October, the headlines were all about the “higher standard deduction.” In reality, the changes are subtle, think of them as the government nudging the furniture a few inches rather than redecorating the room. But if you’re paid partly in restricted stock units (RSUs), employee stock-purchase-plan (ESPP) shares, or incentive stock options (ISOs), even a small shift can create new planning moves. Let’s translate the jargon into plain English.

1. The brackets moved up—but only a little

For single filers, the 24 percent bracket now begins at $190,000 (up from $184,950 in 2024). Married couples filing jointly don’t hit that same rate until $380,000. The top 37 percent bracket starts at $626,350 for singles and $752,700 for joint filers. Standard deductions rose by just $400–$800, depending on filing status. IRSAP News

Why it matters:RSU shares vest as ordinary income on the day they hit your account, so that value stacks on top of your salary and bonus. If your total compensation has been bouncing right at a bracket line, a two-or-three-percent bump may keep you from spilling into the next tier this year. That’s good news—but only if you’re thinking ahead.

2. Withholding on RSUs isn’t always enough

Most companies automatically withhold 22 percent when RSUs vest. Nice in theory, but it assumes you’re safely in the 22 percent bracket. If you’re a senior engineer or product lead in Los Angeles, your effective rate could be 32 percent or higher—federal and California combined. Come April 2026, you might owe a surprise five-figure bill.

Action step: Run a mid-year “withholding check-up.” If your projected taxable income edges past $190,000 (single) or $380,000 (married), ask payroll to bump your supplemental withholding to 35 percent on the next vest. That’s the simplest way to avoid penalty interest later.

3. Match sale windows to bracket windows

The market rebound in early 2025 means many tech employees are again sitting on low-basis ESPP shares bought in the dip. If you’re contemplating a sale, map it to the new bracket lines:

Cash-flow tip: Realize enough gain to stay inside 24 percent. The difference between 24 percent and 32 percent on a $30,000 gain is $2,400, money that could go straight to a backdoor Roth contribution instead.

4. Remember the AMT shadow for ISOs

Inflation changes the regular tax brackets, but the Alternative Minimum Tax (AMT) exemption also adjusts, now $91,400 for single filers and $137,900 for married couples. Exercising and holding ISOs adds “bargain element” income to the AMT side of the ledger. That might be worth it if you expect a big liquidity event, but run the numbers first. A partial cash-less exercise can keep AMT under control while still starting the 12-month clock for long-term capital-gains treatment. IRS

5. Use the new deduction to shore up short-term goals

The extra $400–$800 standard deduction won’t fund your retirement, but it can:

• Offset the interest from a high-yield savings account you’re using for a home down-payment

• Neutralize the taxable portion of I-bond cash-outs

• Cover a slice of extra charitable giving if you itemize every other year

Think of it as found money; direct it to the goal that matters most this quarter.

Putting it all together

1. Check your cumulative taxable income by July—salary + bonus + year-to-date RSU vests.

2. Adjust withholding on future vests if you’re creeping into a higher bracket.

3. Time ESPP and ISO moves around the new bracket thresholds to avoid unnecessary 32 percent hits.

4. Redirect the modest standard deduction boost toward a near-term priority.

None of this requires predicting next quarter’s market just knowing where your numbers sit on the updated IRS ladder.

Ready for a deeper dive into your own equity-comp puzzle? Schedule a call with us to walk through the numbers. Our fee-only, fiduciary approach keeps the focus where it belongs: on your goals, not product sales.