How RSU vest income is split across US states when you live in more than one state during the grant-to-vest period. Plain-English methodology + state-by-state grid.
Quick reference
- Workday fraction = workdays in state / total workdays in grant-to-vest period
- Each state’s W-2 = its fraction times total vest income
- CA: vest income remains CA-sourced for the CA-portion via FTB Pub 1004
- NY: 14-day rule — fewer than 14 workdays in NY excludes NY entirely
- Other states: workday-fraction is the default — consult non-resident return instructions
The workday-fraction formula
For each state s you worked in during the grant-to-vest period:
fraction[s] = workdays_in_s / total_workdays_in_period
state_W2_income[s] = vest_income * fraction[s]The “period” is conventionally grant date to vest date, with workdays counted as physical days worked in each state (weekdays, excluding holidays and PTO where the state’s rules require it).
California — FTB Pub 1004
California Franchise Tax Board Publication 1004 provides the codified workday-allocation rule for stock-based compensation. The CA-portion of vest income remains CA-sourced even after you move out of California — meaning you may file Form 540NR (Non-Resident) and pay CA tax on that fraction indefinitely until the income is fully sourced.
Practical impact: a 4-year cliff with 3 years in California and 1 year in Texas results in a 75% CA-sourced allocation, taxed at CA’s progressive rates (top 13.3% including the mental-health surtax).
New York — 14-day rule
New York’s TSB-M-95(3)I and 20 NYCRR 132.18 establish the 14-day rule: if you worked fewer than 14 days in New York during the grant-to-vest period, NY does not tax any of the vest income. At 14 days or more, NY uses the workday-fraction method (Form IT-203 for non-residents).
Other states
Most income-tax states (CO, NJ, MA, IL, etc.) use a generic former-state allocation similar to the workday-fraction method. There is no codified bright-line rule equivalent to NY’s 14-day test, so consult the specific non-resident return instructions for each former state. Non-tax states (TX, FL, WA, NV, TN, WY, SD, AK, NH) do not allocate any portion of vest income.
Common pitfalls
- Calendar days vs workdays: most states want workdays (weekdays you actually worked), not calendar days of residence. Tracking PTO matters.
- Multi-grant complexity: each grant has its own period. Don’t merge them.
- Trailing tax surprise: moving from CA to a no-tax state does not eliminate CA tax on the CA-portion. Plan for filing two state returns.
- Capital gains separately: the workday-fraction applies to the W-2 portion (vest FMV). Capital gains between vest and sale are sourced to your sale-time state.