Here’s the short answer: in Singapore, equity pay is taxed as employment income, and the tax is triggered when you receive the value, not when you eventually sell. RSUs (restricted stock units) are taxed when they vest — the share value at vesting is added to your income. Stock options (ESOP) are taxed when you exercise them — the gain, meaning market price minus your exercise price, is the taxable amount. Both are then taxed at your marginal income-tax rate, on top of your salary.
📈 How RSUs are taxed
An RSU is a promise to give you shares once they vest. There’s nothing to report when the RSUs are first granted. The taxable moment is the vesting date: whatever the shares are worth that day gets added to your employment income for the year.
So if 1,000 shares vest and each share is worth $50 on the vesting day, that’s $50,000 of extra income — taxed at your marginal rate, the same as salary or a bonus. You don’t get to wait until you sell. Even if you hold the shares and the price later drops, the tax was already locked in based on the vesting-day value.
💼 How stock options (ESOP) are taxed
Stock options work a bit differently. You’re given the right to buy shares at a fixed exercise price (also called the strike price). The taxable event is when you exercise the option — that is, when you actually buy the shares.
The taxable gain is the market price on the day you exercise minus the exercise price you pay. For example, if your exercise price is $10 and the shares are worth $35 when you exercise, your taxable gain is $25 per share. Exercise 2,000 shares and that’s $50,000 added to your income that year.
🧮 A worked example: pushed into a higher band
Singapore’s resident income tax is progressive, running from 0% up to 24% for YA2026. Adding equity income on top of your salary can push part of your income into a higher band.
Say your salary already puts you partway up the brackets. Then $50,000 of RSUs vest in the same year. That $50,000 stacks on top of your salary, so the upper slices are taxed at higher marginal rates than your base pay. Key points to remember:
- The equity value is taxed in the year it vests (RSUs) or is exercised (options), not when you sell.
- It’s added on top of salary, so it’s taxed at your highest applicable rate, not the lowest.
- Singapore has no separate capital-gains tax, so a later rise in the share price isn’t taxed — but a later fall doesn’t reduce the tax you already owe.
You can model this stacking effect with the RSU tax calculator, then see the full-year picture using the Income Tax calculator to estimate your total bill.
✈️ The “deemed exercise” rule for foreigners leaving
If you’re a foreigner and you cease employment or leave Singapore, a special deemed exercise / deemed vesting rule can apply. The taxman treats any unexercised options or unvested shares as if they were exercised or vested shortly before you stop working here — so the value is taxed at that point, even though you haven’t actually received the cash. If the eventual gain turns out lower, IRAS can reassess on the actual figure, but the default is that you’re taxed as you leave.
💡 The one thing to remember
The tax is on the value at vesting or exercise — not at sale. That timing catches many people out, because the tax bill arrives before they’ve sold a single share. It’s worth setting aside cash, or selling enough shares, to cover the tax when the equity lands.
Before your next vesting or exercise date, plug your numbers into the RSU tax calculator to see what to set aside, and use the Income Tax calculator to check how the extra income shifts your overall rate. A few minutes now can save you a nasty surprise at tax time.