Does My Former State Tax Stock Options or RSUs After I Move Abroad?
Many states tax stock options and RSUs based on where you worked during the vesting or grant-to-exercise period, not where you live when you exercise or sell. If you received stock compensation while working in California, New York, or another taxing state and later moved abroad, that state may claim a portion of the income (California FTB: Equity-Based Compensation).
How states allocate stock option and RSU income:
| Compensation Type | State Allocation Method |
| Nonqualified stock options (NQSOs) | Days worked in the state from the grant date to the exercise date / total days in that period |
| Restricted stock units (RSUs) | Days worked in the state from the grant date to the vesting date / total days in that period |
| Incentive stock options (ISOs) | Generally not taxed at exercise for federal; state rules vary on AMT preference |
| Performance shares | Days worked in the state during the performance period / total days |
Example: you received RSUs while working in California, then moved to London after 2 of the 4 vesting years. California claims 50% of the RSU income (2 CA years/4 total years) as state-source income, taxable on a California nonresident return (Form 540NR).
States that are most aggressive about stock compensation:
- California: applies the allocation formula to all equity compensation from CA-based employers
- New York: similar allocation rules, plus the convenience-of-the-employer doctrine
- New Jersey, Connecticut, Massachusetts: follow source allocation principles
What you can do:
- Exercise options before moving to lock in the state tax while you are still a resident (no allocation issue)
- Delay vesting if possible to reduce the state’s proportional claim
- Track days carefully during the grant-to-vest period; the allocation is based on actual workdays, not calendar days
- File a nonresident state return for the year you exercise or vest, reporting only the allocated portion
- Claim credit in your new jurisdiction (if applicable) for state tax paid to avoid double taxation
For more, see our State Taxes for Expats guide.
Last updated on April 29, 2026
