PSU vs RSU: Key Differences Explained

The difference between RSU and PSU awards is one extra condition. In plain terms, the PSU vs RSU meaning is this: an RSU pays for your time, and a PSU pays for your time and the company’s results. Read as RSU vs PSU, the table compares them on what each is, who gets it, what decides the payout, tax, risk, when you can sell and a typical case.

An RSU grant names a number of units, and each one usually turns into one share when it vests. Vesting means you have met the conditions. A common schedule is four years, with the first quarter after one year. If you stay, you get every unit. The RSU guide covers schedules and private-company rules.

A PSU grant names a target, the number of shares paid if the company meets its goals exactly. At the end of the performance period, a board committee measures the result and applies a scale. Beat the goal, and you can get more shares. Miss it, and you get fewer or none.

Apple shows how the scale works. Its PSUs track total shareholder return (TSR), the stock’s gain plus dividends, against other S&P 500 companies over three years. Its 2025 proxy statement sets the payout this way:

• 85th percentile or above200% of target.
• 55th percentile100% of target.
• 25th percentile25% of target.
• Below the 25th percentileNothing.

Results between those points are scaled in between. If Apple’s own return is negative, the payout is capped at 100%. For the period that ended in 2024, the CEO’s target of 255,241 units became 477,301 shares, or 187% of target. Three quarters of his 2024 equity award came as PSUs.

PSUs and RSUs are taxed the same way. The IRS treats an RSU as an unfunded promise to pay stock or cash later, and a PSU is an RSU with a performance test added. So nothing is taxed at grant. Because no shares change hands yet, you cannot make an 83(b) election to be taxed early. IRS Publication 5992 says the taxable event generally comes at vesting.

When shares are delivered, their value that day is wages on your Form W-2. Your employer withholds federal income tax at 22%, the flat rate for supplemental wages. Above $1 million of such pay in a year, the rate is 37%. Social Security tax of 6.2% applies up to $184,500 of wages in 2026, and Medicare tax of 1.45% applies to all of it.

Your cost basis in the shares is their value at delivery. If you sell later, the change from that value is a capital gain or loss. It is long term if you held the shares more than one year. The RSU taxes guide works through a full year.

The Same 1,000 Units, Five Outcomes

An executive holds 1,000 RSUs and 1,000 target PSUs. Both deliver when the stock is at $40. The PSUs can pay at 150%, 100%, 50% or nothing, depending on the result.

The tax rule is the same in every row. Only the share count moves. The 22% withheld is often less than the tax due on a large delivery, so the rest comes when you file.

A stock option is the right to buy shares later at a fixed price, the strike price. It pays only if the stock rises above that price. PSUs and RSUs keep value at any share price above zero, and you pay nothing for them.

The tax timing differs too. A non-qualified stock option (NSO) is taxed when you exercise it, on the gap between the share value and the strike. An incentive stock option (ISO) has no regular tax at exercise but can trigger the alternative minimum tax. The ISO vs NSO guide compares them in detail.

• RSUsA fixed number of shares, free to you, taxed as wages on delivery.
• PSUsA variable number of shares, free to you, taxed as wages on delivery.
• Stock optionsA right to buy at a set price. You pay the strike, and tax depends on the option type.

A deferred stock unit (DSU) is a unit whose shares arrive later than it vests. That date is often when the holder leaves the company or its board. Some companies use them to pay outside directors.

Because payment waits, Section 409A limits when it can happen. The permitted events are separation from service, a fixed date, disability, death, a change in control and an unforeseeable emergency. Income tax is due when the shares arrive. Under a special timing rule for deferred pay, Social Security and Medicare can be due earlier, when the units vest. See Section 409A for how these rules work.

Performance Stock Units

For

Can pay more than the target when results are strong. Ties your pay to the measures investors watch.

Against

Can pay nothing even if you stay. Goals depend on factors you do not control, such as the wider market.

Verdict: PSUs suit a senior executive who can move the result and can live with a wide range of outcomes. The target is a midpoint. Plan around the payout floor written in your award agreement.

Restricted Stock Units

For

A known number of shares. Free to receive. Tax withheld at delivery.

Against

No upside beyond the share price. Units are lost if you leave early. At private companies, they can wait years for an IPO or a sale.

Verdict: RSUs suit almost any employee, because the share count is fixed and only the price moves. Their drawback is the same as a PSU’s: the whole value at delivery is taxed as pay.

If you are offered PSUs, read three things in the award agreement. Find the metric and the period it covers. Find the payout scale, including the floor and the cap. Find what happens if you leave, or if the company is sold, before the period ends.

If you hold RSUs at a private company, the shares may not arrive until an IPO or a sale. Until then, you hold a promise that usually cannot be sold. The vested vs unvested guide explains what you keep when you leave. For awards you own outright or buy, see RSA vs RSU and ESPP vs RSU. The wider picture is in equity compensation.

Common Mistakes

• Counting PSUs at targetThe target is a midpoint. Budget for the floor in your agreement.
• Treating withholding as the full taxThe 22% is a prepayment. If your top rate is higher, the rest is due when you file.
• Expecting an 83(b) electionNeither RSUs nor PSUs allow one, because no shares change hands at grant.
• Using a basis of zeroYour basis is the value already taxed as wages. A zero basis taxes that amount twice.

Restricted stock unit (RSU)

A promise to deliver a share, or its cash value, once you have worked a set time. Taxed as wages on delivery.

Performance stock unit (PSU)

An RSU that also depends on company goals. The number of shares can range from zero to a multiple of the target.

Deferred stock unit (DSU)

A unit whose shares are delivered after vesting, often when the holder leaves. Section 409A limits the payment dates.

Vests

Meets its conditions. A unit that vests turns into a share, or cash, and is usually taxed then.

Target

The number of PSU shares paid if the company meets its goals exactly.

Performance period

The span of time over which PSU goals are measured. Apple uses three years.

Total shareholder return (TSR)

The change in a stock’s price plus dividends over a period.

Supplemental wages

Pay outside regular salary, such as bonuses and stock awards. Federal income tax is withheld on it at a flat 22%.

83(b) election

A filing that lets you be taxed on restricted shares when you receive them. It does not apply to RSUs or PSUs.

Strike price

The fixed price at which a stock option lets you buy shares.

Cost basis

What your shares cost for tax, including income already taxed on them.

Every rule and figure was checked on November 6, 2026. Tax rules are US federal rules for tax year 2026. The Apple figures come from one company’s proxy statement and show one plan’s terms. The worked example is illustrative arithmetic. State tax is not covered.