What New York residents actually pay
New York taxes ordinary income at a top marginal rate of 10.9%. RSU settlement value, NSO exercise spread, and ESPP discount income all count as ordinary wages for this purpose and flow through the state's normal brackets.
NYC residents pay an additional ~3.9% city tax. Trailing nexus rules aggressively tax post-move equity.
Federal Section 1202
Qualified Small Business Stock (QSBS) lets you exclude up to $10M or 10× your basis (whichever is greater) in federal capital gains on eligible C-corp stock held at least five years. The stock must have been acquired at original issuance from a company with under $50M in gross assets at the time.
New York conformity
New York conformity with federal QSBS rules varies year by year. California, for example, fully decouples and still taxes QSBS gain despite federal exclusion — a surprise for Bay Area founders on exit. Check current conformity before you file.
Frequently asked
- Does New York tax RSU income the same as wages?
- Yes. New York treats RSU ordinary income as wages, taxable at the state's top marginal rate of 10.9%. Supplemental-wage federal withholding (22%, or 37% above $1M YTD) does not adjust for state withholding, so you often owe extra at filing.
- What happens if I exercise ISOs while living in New York?
- New York does not run a separate state AMT, so only federal AMT applies. You still need to model the bargain element carefully if you plan a cashless exercise-and-sell.
- I moved to New York from another state. Who taxes my vesting RSUs?
- Most high-tax states (CA, NY, MA) source RSU ordinary income to workdays between grant and vest. If your grant pre-dates your New York move, expect the old state to tax the portion of each tranche attributable to workdays earned there. New York taxes the remainder.
- Can I reduce New York taxes by timing my RSU sales?
- New York taxes long-term capital gains at the same rate as ordinary income, so timing alone does not produce a state savings — only federal. Holding for 12 months still halves the federal rate on gains above basis.
Related
- RSU taxes — New York
- ISO exercises and AMT — New York
- Capital gains tax — New York
- Moving to or from New York with unvested equity: trailing nexus rules — New York
- RSU vesting schedules — New York
- ESPP taxation — New York
- NSO exercises and state tax — New York
- 401(k) and retirement accounts — New York
- Leaving New York: how to cleanly break residency before a liquidity event — New York
- New York equity-comp overview