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Some token distributions are treated as Restricted Token Units (RTUs) — the token equivalent of an RSU. Like an RSU, an RTU is taxable income, so tax must be withheld before the tokens reach the recipient. Magna’s tax withholding flow calculates that withholding and distributes the net token amount. Video walkthrough — Distributing to Employees (Tax Withholding):
Tax withholding is only available on Direct Transfer allocations, not Claim contracts. Because a Direct Transfer is initiated by the admin at each unlock (rather than pulled by the stakeholder from a pre-funded contract), Magna can calculate and apply the withholding on each distribution. To use it, enable the Tax Withholding flag under Settings & Features, then create the taxable allocations.
This flow is built for US tax treatment. Other jurisdictions (for example, the UK) have different regulations and are not currently supported.

Above: A screenshot for an allocation that will be subject to tax withholding

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Where the tax rates come from

Magna does not hold a recipient’s income bracket, residency, or other jurisdiction-specific details — that information lives in your payroll / HRIS provider. Magna supplies the gross value of a distribution; the provider returns the tax rate; Magna calculates the withholding from it. Magna supports two providers, Rippling and Deel, in one of two modes:
  • CSV exchange (Rippling or Deel): export a CSV in the provider’s standard format, have your payroll platform (or its account manager) populate the tax rates, then re-import it.
  • Deel integration (automatic): with the Deel integration enabled (add your Deel API key under Settings & Features), Magna pulls tax rates directly from Deel at distribution time — no CSV export/import round-trip.
Video walkthrough — Tax Withholding with Rippling:
Confirming that a recipient’s tax details (residency, withholding rate, and so on) are accurate is the foundation’s responsibility, not Magna’s. Magna applies whatever rates the payroll provider returns.

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The withholding workflow

  1. Start the Direct Transfer: From the taxable allocations, click Direct Transfer. Magna opens the tax withholding workflow.
  2. Enter token price and pay type:
    • Token Price sets the Fair Market Value (FMV) used to convert the token amount into a dollar value for taxation. By default the FMV is a rolling average of the token price on the day the distribution is carried out; the admin can override it with a custom valuation.
    • Pay Type (salary or bonus) determines which rate applies — in the US, salary and bonus income are withheld at different rates.
  3. Calculate the gross value: for each allocation, Magna computes the Gross Tokens (the vested amount queued to be sent) and the Gross Value (Gross Tokens × FMV).
  4. Get the tax rates:
    • CSV exchange: export the Rippling- or Deel-format CSV, have your payroll platform fill in the tax rates and net values, then re-import it. Magna validates the file and confirms the data is complete before continuing.
    • Deel integration: Magna pulls the rates automatically and flags any issues — skip the export/import step.
  5. Review the calculated withholding: using the FMV and the tax rates, Magna computes the withheld amount and the Net Tokens / Net Value to be distributed.
  6. Create and sign the transaction: creating the transaction works like a standard Direct Transfer, with an additional line for the withheld amount. Sign it and the net tokens are sent to the recipient. The final transaction summary shows the full breakdown.
  7. Review distribution history: taxable distributions can be reviewed afterward — the stakeholder sees all of their own tax-withheld distributions to date, and the admin sees them across all allocations.