Google Stock Units (GSUs): Vesting, Taxes, Tips, & More
As a Google employee, Google Stock Units are a significant portion of your total compensation package. Here’s how to make the most of this valuable benefit and use it to save more for retirement.
Key Takeaways
GSUs are Google's version of restricted stock units, representing shares of Alphabet (GOOG) stock.
GSUs vest over a four-year period for most new hire grants.
GSUs are taxed as ordinary income when they vest, and capital gains may be taxed when you sell.
Google offers trading windows for selling vested shares, or you can enroll in the Employee Trading Plan (ETP) for automatic sales
What Are Google Stock Units (GSUs)?
GSUs are Google’s version of restricted stock units (RSUs). A GSU represents a promise from Google to deliver one share of Alphabet Class C capital stock at a future date, provided you meet certain vesting requirements.
Unlike stock options that require you to purchase shares at a set price, GSUs are granted to you at no cost. Once they vest, you own the shares outright and can choose to hold or sell them.
Eligibility
Most full-time Google employees receive GSU grants as part of their compensation package. The size of your initial grant depends on your role, level within Google's organizational structure, and location. Higher-level positions typically receive larger equity grants, reflecting their increased impact on company performance.
GSU Grants
Google awards GSUs at key points throughout your career with the company.
New Hire Grants
When you join Google, your offer letter specifies an intended dollar value for your initial GSU grant (for example, $200,000). The actual number of GSUs you receive is calculated by dividing this intended value by the average closing price of Alphabet Class C stock during the calendar month prior to your grant date, rounded up to the nearest full GSU.
New employees receive their equity grant on the first Wednesday after their first full month of employment. This means if you start on February 15th, you would receive your GSU grant on the first Wednesday after March 31st.
Annual Refresher Grants
Google provides additional GSU grants during annual performance reviews, typically awarded in January. These refresher grants help maintain competitive compensation as your initial grant vests and help offset the front-loaded vesting structure. The size of your refresher depends on your performance rating and Google's overall compensation pool.
New employees typically don't receive refreshers at their first annual review since they're still ramping up in their roles. However, you become eligible for refresher grants starting with your second annual review.
Promotional Grants
When you advance to a higher level at Google, you often receive additional GSUs to reflect your increased responsibilities and compensation band.
Special Recognition Grants
Occasionally, Google awards GSUs for exceptional contributions or critical projects, though these are less common than initial and refresher grants.
Google's Vesting Schedule
New Hire Grants
Google uses a front-loaded vesting schedule for GSUs during the first two years of employment. This structure provides more upfront value compared to traditional vesting schedules. For most new hires, GSUs will vest on this schedule:
Year 1: 38% of your GSUs vest
Year 2: 32% of your GSUs vest
Year 3: 20% of your GSUs vest
Year 4: 10% of your GSUs vest
Unlike many tech companies that require employees to complete one full year before any shares vest, Google eliminated the traditional cliff period in 2021. This means your GSUs begin vesting shortly after you start, providing earlier access to equity value.
Vesting Frequency
How often your GSUs vest depends on the total number of units in your grant:
Fewer than 32 GSUs: Annual vesting
32–63 GSUs: Semi-annual vesting
64–159 GSUs: Quarterly vesting
160+ GSUs: Monthly vesting
Most employees at L5+ receive monthly vesting, creating a steady stream of equity compensation throughout the year.
Refresher Grant Vesting
Annual refresher grants typically vest over four years on a different schedule than your initial grant, often using a 25/25/25/25 even distribution. This creates overlapping vesting schedules that can substantially increase your total compensation once you've been at Google for several years.
Leaving Google
If you leave Google before your GSUs have fully vested, any unvested GSUs are forfeited. Only shares that have already vested remain yours. However, in certain circumstances, such as retirement or disability, some unvested GSUs may vest immediately or continue vesting according to the original schedule. Review your specific grant agreements for details.
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Tax Implications of Your GSUs
Taxation at Vesting
When your GSUs vest, they become taxable as ordinary income at their fair market value. This income is reported on your W-2 and is subject to:
Federal income tax
State income tax (where applicable)
Social Security tax (up to annual wage limits)
Medicare tax
The tax is calculated based on Alphabet's stock price on the vesting date, regardless of whether you immediately sell the shares or hold them.
Tax Withholding
Google automatically handles tax withholding through its brokerage partner, Morgan Stanley. The company sells a portion of your vesting shares to cover estimated taxes:
22% federal withholding for GSU income under $1 million
37% federal withholding for GSU income over $1 million
However, the default 22% withholding frequently falls short for mid to high-level Google employees. If you're in the 32%, 35%, or 37% federal tax brackets, you'll likely owe substantial additional taxes when filing your return. To avoid underpayment penalties and year-end tax surprises, consider:
Increasing your withholding percentage through Morgan Stanley during open trading windows
Making quarterly estimated tax payments
Increasing withholding on your regular Google paycheck
Setting aside cash from each vesting event to cover year-end tax obligations
Capital Gains Taxation
After your GSUs vest and are deposited in your Morgan Stanley account, any future gains or losses are subject to capital gains taxes:
Short-term capital gains: If you sell vested shares within one year of the vesting date, gains are taxed as ordinary income at your marginal tax rate.
Long-term capital gains: If you hold vested shares for more than one year before selling, gains qualify for preferential long-term capital gains rates of 0%, 15%, or 20%, depending on your taxable income.
You might consider selling most or all vested GSUs to avoid concentration risk. This converts your equity compensation to cash that you can use to diversify your portfolio, max out your retirement accounts, or spend on other financial goals.
Wash Sale Rules
If you have monthly vesting and regularly trade Alphabet stock, you may encounter wash sale rules. A wash sale occurs when you sell stock at a loss and purchase the same stock within 30 days before or after the sale. The IRS disallows the immediate loss deduction, instead adding it to your cost basis for the replacement shares.
With monthly GSU vesting, you're effectively "purchasing" new shares each month, which can trigger wash sale treatment if you sell at a loss around vesting dates. This makes tracking cost basis and tax lots more important for Google employees.
Trading Restrictions and the Employee Trading Plan
Google restricts when employees can sell vested GSUs to prevent insider trading. Most employees can only trade during open trading windows. Trading windows typically open two to three days after quarterly earnings announcements, last approximately six to eight weeks, and close before the next earnings announcement.
If you're subject to trading restrictions based on your role or level, you must plan your selling strategy around these windows. Missing a trading window means waiting until the next one opens to access your vested equity.
Employee Trading Plan (ETP)
To provide more flexibility, Google offers an optional Employee Trading Plan that allows automatic selling of GSUs regardless of trading windows. The ETP operates similarly to a 10b5-1 plan.
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Making the Most of Your Google GSUs
Managing Concentration Risk
As both your employer and a major portion of your portfolio, investing too much in Google can be a concentration risk. Financial advisors typically recommend limiting any single company stock to 5%–10% of your total net worth. If Google is taking up too much of your portfolio, consider taking these steps:
Sell a predetermined percentage (50-75%) of shares immediately upon vesting.
Establish portfolio targets and sell GSUs when Google exceeds that threshold.
Hold all vested shares for exactly one year before selling to optimize for long-term capital gains, though this requires careful tracking.
Tax Optimization Strategies
There are several strategies you can use to help minimize your GSU tax burden.
Charitable giving: Donate appreciated GSUs directly to charity to avoid capital gains taxes while receiving a deduction for the full fair market value. This strategy works best for shares held longer than one year.
Tax loss harvesting: If you hold Alphabet shares that have declined below their vesting value, selling them generates capital losses that can offset other investment gains or up to $3,000 of ordinary income annually.
Time additional income: In years with particularly large GSU vesting, consider deferring bonuses or other variable income if possible to avoid pushing into higher tax brackets.
Coordinating with Other Google Benefits
GSU management works best when coordinated with your other Google benefits. For example, you could:
Use GSU proceeds to maximize your 401(k) contributions, including the mega backdoor Roth strategy if you are able.
Allocate GSU proceeds toward maximizing HSA contributions ($4,400 individual/$8,750 family in 2026) for triple tax advantages.
Designate a portion of each vesting event for emergency savings rather than relying solely on salary.
Planning Around Career Transitions
If you're considering leaving Google, time your departure strategically around vesting dates. Leaving just before a large vesting event can cost tens of thousands in forfeited equity. Review your vesting schedule at least 6–12 months before any planned departure.
Getting Professional Help
As your compensation grows and you accrue more GSUs, managing your equity can get complex. A fiduciary financial advisor can help you make the right choices to protect your wealth. Advanced strategies like charitable giving or tax loss harvesting can reduce your tax burden and allow you to save more for retirement.
Work with TrueWealth Financial Partners
At TrueWealth Financial Partners, we specialize in helping you make the most of your Google compensation. We understand the nuances of Google's GSU program, including vesting schedules, tax implications, trading windows, and how to integrate GSUs into your comprehensive financial plan.
Our fee-only fiduciary advisors provide objective guidance without conflicts of interest from commission-based products. We focus entirely on helping you make smart decisions that build long-term wealth.
Ready to optimize your Google GSU strategy? Schedule a free consultation with one of our fiduciary financial advisors today.
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Google Stock Units FAQs
What happens to my unvested GSUs if I leave Google?
Any unvested GSUs are forfeited when you leave Google. Only shares that have already vested remain yours to keep or sell. This means that leaving just before a significant vesting event can cost you substantial equity value.
Can I transfer my vested GSUs to another brokerage account?
Yes, once your GSUs vest and are deposited in your Morgan Stanley account, you can transfer the shares to an external brokerage. However, this doesn't change the tax implications. You’ll still pay income tax on the shares at vesting.
How do Google's annual refresher grants work?
Google typically awards refresher GSUs during annual performance reviews in January. The size depends on your performance rating, with higher performers receiving larger grants. Refreshers usually vest over four years on a 25/25/25/25 schedule, separate from your initial grant's vesting schedule.
Should I enroll in the Employee Trading Plan (ETP)?
The ETP works well if you want complete automation and don't plan to hold shares for long-term capital gains treatment. However, it eliminates all flexibility in selling decisions. Consider your overall financial plan, tax strategy, and whether you want control over selling timing before enrolling.
What is the difference between "sell to cover" and "sell all" options?
"Sell to cover" means selling only enough shares to cover your tax withholding obligation, leaving you with the remaining shares in your Morgan Stanley account. "Sell all" immediately converts all vested shares to cash (minus taxes). Most employees use "sell to cover" by default.
What happens to my GSU value if Alphabet's stock price drops?
GSUs always have some value as long as Alphabet's stock price is above zero, unlike stock options that can become worthless. If the stock price drops between grant and vesting, your vested shares are worth less than the original intended value, but they still provide compensation.
Do I need to report GSU income separately on my tax return?
No, GSU income at vesting is included in your W-2 as wages. However, if you sell shares and have capital gains or losses, you must report those on Schedule D and Form 8949.