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Last updated: October 2026. Anthropic details below are based on reporting ahead of its public S-1 and will be updated once the filing posts.
A double-trigger RSU settles only after you meet the time-vesting schedule and the company has a liquidity event, usually an IPO. On that day, every time-vested RSU settles at once, and its full value becomes W-2 income for the year, withheld at a flat 22% federal.
If you hold RSUs at a private company, you've probably been vesting on paper for years. The grant portal shows a number, the number climbs after every funding round, and none of it has touched your W-2. The IPO changes that in a single day.
Anthropic is the timely example. It submitted a confidential draft S-1 on June 1, 2026, Bloomberg reported it could start marketing the deal as soon as the week of November 9, and its newer grants are reportedly double-trigger RSUs. If you work there, the guide for Anthropic sales reps and the Anthropic RSU tax breakdown cover the company-specific pieces, and the QSBS question for Anthropic stock covers why that exclusion almost certainly does not apply. This post covers the mechanics that apply at any company going public, and what happened to employees at five companies that already did.
What Is the Difference Between Single and Double Trigger RSUs?
A single-trigger RSU vests on time alone; a double-trigger RSU needs time plus a liquidity event. Public companies use single-trigger grants, so shares land in your account on each vest date and get taxed as wages that day. Private companies mostly use double-trigger grants, where nothing settles until an IPO or acquisition happens, no matter how long you've been there.
| Single trigger | Double trigger | |
|---|---|---|
| What has to happen | Time-vesting date | Time-vesting date and a liquidity event |
| When you're taxed | Each vest date | When both triggers are met (often IPO day for pre-IPO vesting) |
| Who uses it | Public companies | Private companies |
| If no IPO or sale ever happens | Not applicable | Units can expire, often around seven years after grant |
After the IPO, double-trigger grants behave like single-trigger ones. Any units that time-vest later settle on their normal dates, and the general rules in ISO vs. RSU equity compensation apply from there.
Why Do Private Companies Use Double-Trigger RSUs?
So employees don't owe tax on stock they can't sell. With single-trigger RSUs at a private company, every vest would create W-2 income on shares that have no market, and you'd be paying real cash to the IRS for an asset you couldn't turn into cash. The liquidity trigger moves the taxable moment to the day a market exists.
The catch is the expiration date. To keep the deferral working under the tax rules, many plans give the liquidity trigger a deadline, commonly seven years from grant. Miss it and the units can lapse, even ones you've fully time-vested. Plans also differ on whether time-vested units survive if you leave before the IPO; what happens to unvested RSUs when you quit covers that side.
Are RSUs Taxed When a Company Goes Public?
Double-trigger RSUs are. Every unit that has met its time schedule settles at the IPO (or on a date shortly after, depending on the plan), and its value on the settlement date is ordinary income on your W-2. Three years of vesting becomes one year of income.
For a sales rep, that income stacks on top of salary and a full year of commission. A rep who normally lives in the 24% bracket can watch the RSUs alone carry the return well into 35%, and none of the commission planning done earlier in the year accounted for it.
IPO on the calendar and RSUs on paper?
Bring your grant documents and comp plan to a free 30-minute call. We'll estimate the tax bill at a few different IPO prices.
Build Your Commission PlanWhy Are RSUs Withheld at 22% When I Owe More?
Because RSU income counts as supplemental wages, and IRS Publication 15 lets employers withhold a flat 22% federal on supplemental wages up to $1 million a year. Every dollar above $1 million must be withheld at 37%.
The flat rate ignores your actual bracket. For 2026, the 35% bracket starts at $256,225 of taxable income for single filers ($512,450 married filing jointly), and 37% starts at $640,600 ($768,700 jointly). A settlement somewhere between $250,000 and $1 million lands mostly in the 35% bracket while getting withheld at 22%, and that 13-point difference shows up as a bill in April.
On an ordinary commission check, I tell reps to set aside an extra 10% on top of the 22% withheld, which how much to set aside for taxes explains. That rule of thumb breaks on an IPO vest. The gap is too wide, so you need the bracket math, which the example below walks through.
How Does Net Share Settlement Work at an IPO?
The company keeps some of your shares to pay the withholding. With net share settlement, it holds back enough shares to cover the required tax, pays the IRS in cash itself and delivers the remainder to you. Other companies use sell-to-cover, where a broker sells part of your shares on the market to raise the tax money.
Facebook gave the public a clear look at net settlement after its 2012 IPO. Its 8-K filing described withholding shares at an assumed 45% combined tax rate; about 101 million shares were withheld and about 124 million delivered to employees. Whichever method your company uses, the withheld shares cover only the withholding rate. The difference between that rate and your real bracket comes out of your bank account.
Can I Sell My RSUs During the IPO Lockup?
Usually not. A lockup is an agreement that blocks pre-IPO shareholders, employees included, from selling for a set period after the IPO, most often 180 days. Shares withheld or sold to cover taxes at settlement are the exception, while everything delivered to you sits untouched until the lockup ends.
That's the trap. Your tax gets set at the settlement price, and your sale price is whatever the stock trades at months later. Anthropic is reportedly weighing a lockup longer than 180 days, possibly into mid-2027, with a limited sale allowed in the IPO itself partly to cover taxes. The Anthropic lockup post tracks what's been reported.
What Happens If the Stock Drops After I'm Taxed on My RSUs?
You still owe tax on the settlement-day value. Your cost basis in the delivered shares equals the price used for your W-2 income, so selling lower after the lockup creates a capital loss. Capital losses offset capital gains first; after that, only $3,000 a year can offset ordinary income ($1,500 if married filing separately), and the rest carries forward.
Ordinary income gets taxed at up to 37% this year. The matching loss comes back $3,000 at a time unless you have gains to soak it up, and that mismatch is what burned employees in the case studies below.
What Does an IPO Vest Look Like With Real Numbers?
Suppose a single sales rep in a state with no income tax earns $187,300 in salary and commission this year. Her company goes public at $30 a share, and 11,290 time-vested RSUs settle on IPO day. That's $338,700 of new W-2 income.
| At settlement | Amount |
|---|---|
| RSU income (11,290 shares x $30) | $338,700 |
| Federal withheld at 22% (about 2,484 shares held back) | $74,514 |
| Shares delivered to her (8,806 x $30) | $264,180 |
Her taxable income before the RSUs is $171,200 after the $16,100 standard deduction. The RSUs stack on top and run through three brackets:
| Slice of the $338,700 | Bracket | Federal tax |
|---|---|---|
| $30,575 (up to $201,775) | 24% | $7,338 |
| $54,450 (up to $256,225) | 32% | $17,424 |
| $253,675 (up to $509,900) | 35% | $88,786 |
| Total federal income tax on the RSUs | $113,548 | |
| Withheld at 22% | $74,514 | |
| Gap owed in April | $39,034 |
She's already past the $184,500 Social Security wage base, so no Social Security comes out of the RSUs. Medicare at 1.45%, plus the 0.9% Additional Medicare Tax on wages above $200,000, adds about $7,845, and payroll withholds that.
Now the stock falls 40% during the lockup, to $18 a share.
| After the lockup | Amount |
|---|---|
| Value of 8,806 shares at $18 | $158,508 |
| Cash she owes the IRS in April | $39,034 |
| Left after paying the gap | $119,474 |
| Capital loss if she sells ($264,180 basis minus $158,508) | $105,672 |
She paid $113,548 of federal income tax on stock she sold for $158,508, which works out to 72 cents of tax for every dollar she eventually received. The $105,672 loss helps only if she has gains to offset; against ordinary income alone, at $3,000 a year, it would take about 35 years to use up. State income tax would make every line worse.
Want this table with your own numbers?
We'll run your shares, your brackets and your state before the lockup starts, so the April bill isn't a surprise.
Build Your Commission PlanWhat Happened to RSU Holders at Facebook, Uber, Rivian, Figma and Reddit?
Four of these five stocks traded well below their IPO price when employees could finally sell.
| Company | IPO price | Later price | What happened |
|---|---|---|---|
| Facebook (2012) | $38 | About $19 around RSU settlement | Net-settled RSUs at an assumed 45% rate; about 101 million shares withheld |
| Uber (2019) | $45 | About $25.58 at lockup expiry | Employees taxed near $45 on shares later in the mid-$20s; RSU handling led to litigation |
| Rivian (2021) | $78 | About $23 around lockup expiry | Down roughly 70% from the IPO price |
| Figma (2025) | $33 (peaked near $143) | $22.51 at lockup end | About 80% below its peak by the time employees could sell |
| Reddit (2024) | $34 | About $50 | The counterexample: shares rose |
Figma is the hardest one to watch, because employees saw their stock trade at four times the IPO price and couldn't touch it. Reddit belongs in the table too. Some IPOs go up, and nobody knows in advance which column a company will end up in, so the plan has to work in both.
How Should I Plan for Double-Trigger RSU Taxes Before an IPO?
Plan the tax at the IPO price and the sale at a lower one. Four steps cover most of it:
- Estimate the tax at the IPO price. Count your time-vested units, multiply by a few possible prices and run each through your brackets the way the example does.
- Hold cash for the gap. Withholding covers 22%; the difference to your bracket, plus state tax, comes from cash. Keep it in your high-yield savings reserve, the same single account sales reps use to smooth commission swings. If you don't have one set up yet, the free income smoothing resources show how. If your income last year topped $150,000, IRS Publication 505 lets you avoid the underpayment penalty by paying 110% of last year's tax through withholding, although the bill itself still comes due.
- Decide your sell plan before the lockup ends. Write down what share of your stock you'll sell on the first open day and why. If your company requires a 10b5-1 trading plan, the SEC's rules add a 30-day cooling-off period for most employees, so the decision comes even earlier.
- Don't spend paper value. The grant portal number is an estimate until shares are sold. Don't sign for a house or a car against it.
I spent more than three years carrying a quota in tech sales before I became a planner, and the reps I talk to now usually have the commission side figured out. The IPO year is where the planning falls apart, because two income streams that were never designed together land on the same return. The equity compensation hub has the rest of the series.
Holding double-trigger RSUs and a quota?
Bring your comp plan and grant docs. We'll map the IPO-year tax bill before it lands.
Build Your Commission PlanFrequently Asked Questions
What is a double-trigger RSU?
A double-trigger RSU needs two events before it settles: you meet the time-vesting schedule, and the company has a liquidity event such as an IPO or acquisition. Until both happen, you don't receive shares and you don't owe tax. Private companies use them so employees aren't taxed on stock they can't sell.
Are RSUs taxed when a company goes public?
Double-trigger RSUs are. When the IPO happens, every RSU that has already met its time schedule settles, and its value on the settlement date becomes ordinary W-2 income for that year. Years of vesting can land on one tax return.
Why are RSUs taxed at 22%?
They aren't taxed at 22%; they're withheld at 22%. IRS Publication 15 lets employers withhold a flat 22% federal on supplemental wages up to $1 million a year and requires 37% above that. Your actual tax follows your brackets, which reach 35% at $256,225 of taxable income for a single filer in 2026.
What happens if the stock drops after I'm taxed on RSUs?
You still owe ordinary income tax on the value at settlement. Your cost basis equals that value, so selling lower creates a capital loss. The loss offsets capital gains first, then only $3,000 a year of ordinary income, with the rest carried forward.
Can I sell RSUs during the lockup?
Usually not. Pre-IPO shareholders, employees included, typically can't sell for a set period after the IPO, most often 180 days. The exception is shares the company withholds or sells to cover tax withholding at settlement.
Why was my RSU withholding 37%?
Once your supplemental wages from one employer pass $1 million in a calendar year, federal withholding on every dollar above that line must be 37%. A large IPO settlement can cross that threshold in a single day.
What happens to double-trigger RSUs if the company never goes public?
It depends on the plan. Many double-trigger plans set an expiration on the liquidity trigger, often seven years from grant. If no IPO or sale happens by then, the RSUs can expire worthless, including ones that have fully time-vested.
This article is for educational purposes and isn't tax or legal advice. Anthropic has not publicly confirmed its IPO terms; details are based on reporting as of October 2026.
