How New York Taxes Stock Compensation
RSUs, options and the allocation rules that catch people who earned equity here and vested it somewhere else.
Equity compensation is where New York tax gets genuinely difficult, and where the mistakes are expensive. The core problem is timing: equity is granted at one moment, vests at another, and is sold at a third, and the tax treatment attaches to different events for different instruments.
Restricted stock units
RSUs are generally taxed as ordinary compensation income when they vest and settle, based on the value at that point. Withholding usually happens automatically, often by selling a portion of the shares.
The frequent shortfall is that statutory withholding rates on supplemental wages may be lower than the recipient's actual marginal rate once federal, state and city layers stack. People discover this at filing, not at vesting.
Non-qualified and incentive stock options
Non-qualified options are generally taxed as ordinary income on the spread at exercise. Incentive stock options have different federal treatment and interact with the alternative minimum tax, which is a whole planning discipline of its own.
The allocation problem
This is the New York-specific part. Equity is compensation for services, and New York taxes non-residents on New York-source income. If you were working in New York during the period the award was earned, New York can claim a portion of the income even if you had moved away by the time it vested.
The apportionment typically runs on workdays over the relevant period. The practical consequence is that leaving New York does not cleanly sever the state's claim on equity already earned here, and the state does pursue this.
Keep records before you need them
Grant dates, vesting schedules, and where you were physically working across the earning period. Reconstructing this years later, under audit, is materially harder than recording it as you go.
This is general information, not tax advice. Rates and thresholds change; confirm current figures with the agencies linked below or with your accountant.