How states tax RSU income
When RSUs vest, the vest-day value is wage income for state purposes too, taxed at your state's regular rates. There's no special rate for equity and no deferral.
What differs is withholding. Some states set a flat supplemental rate for bonuses and stock compensation, for example California 10.23%, New York 11.70%, Oregon 8% and Minnesota 6.25%. Flat-tax states usually withhold their flat rate. Others use their regular wage tables. Whether the result matches your final bill depends on your bracket, so check the state line on your vest confirmation.
Which state gets to tax a vest? Generally the state where you worked while the RSUs were being earned, between grant and vest, and your state of residence taxes all your income, with a credit for tax paid to other states. If you stayed in one state the whole time, it's simple. If you moved, see the section on moving below.
The highest-tax states for RSUs
California: up to 13.3%
California's rates rise to 9.3% at about $73,000 of taxable income (2025 thresholds, indexed each year), 10.3% at about $371,000, 11.3% at about $446,000 and 12.3% at about $743,000. The 13.3% headline rate includes a 1% surcharge on income above $1 million. Most tech salaries pay 9.3% on RSU income.
Employers must withhold 10.23% on stock compensation, more than the 9.3% most people owe. So in California the state side is usually slightly over-withheld, and the real gap is federal. California also withholds SDI (1.3% in 2026, no wage cap) on RSU income.
New York: up to 10.9%, plus New York City tax
For a single filer, New York's 2026 rates are 5.9% on taxable income from $80,650 to $215,400 and 6.85% up to about $1.08 million; 9.65%, 10.3% and 10.9% only apply above $1.08 million, $5 million and $25 million. Above $107,650 of income, New York's tax-benefit recapture gradually taxes your whole income at your top bracket rate, which raises the effective rate on RSU income in the phase-in ranges.
New York City residents add city tax of up to 3.876%. Example: a Manhattan resident with a $250,000 salary and a $100,000 vest owes about $7,480 of New York State tax and about $3,876 of city tax on the RSUs. With withholding at the supplemental rates (11.70% state, 4.25% city), both are over-withheld, while the federal side is short by about $12,330.
New York's convenience-of-the-employer rule can also tax remote workers of New York employers. See the FAQ.
New Jersey: up to 10.75%
New Jersey taxes single filers at 6.37% between $75,000 and $500,000, 8.97% up to $1 million and 10.75% above. Most tech employees pay 6.37% on RSU income. New Jersey has no flat supplemental rate; employers use the wage tables. If you live in New Jersey and work in New York, New York taxes the income from your New York workdays and New Jersey gives you a credit for it.
Oregon: up to 9.9%
Oregon's 9.9% rate starts at $125,000 of taxable income for single filers, so nearly all RSU income is taxed at 9.9%. The supplemental withholding rate is 8%, so Oregon is usually under-withheld on RSUs. Portland-area residents may also owe the Metro Supportive Housing Services tax (1%) and Multnomah County's Preschool for All tax (1.5%, rising to 3% at higher incomes) on income above $125,000 (single). Check that these are being withheld or covered by estimated payments.
Minnesota: up to 9.85%
Minnesota's top rate of 9.85% starts at roughly $200,000 of taxable income for single filers (indexed yearly). Its supplemental withholding rate is 6.25%, so higher earners are often under-withheld at the state level too.
The no-income-tax states
Nine states don't tax wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. In these states there's no state tax on RSU income and nothing is withheld. The gap is purely federal.
That federal gap can still be large. A Washington-based engineer with a $240,000 salary and an $80,000 vest owes about $9,430 more in federal tax than the 22% withheld, because most of the vest falls in the 32% and 35% brackets.
Washington specifics: Washington taxes long-term capital gains (7%, and 9% on gains above $1 million) above an annual deduction ($278,000 for 2025). It applies when you later sell shares held more than a year, not to RSU income at vest. Washington has also enacted a 9.9% tax on household income above $1 million starting January 1, 2028; a repeal initiative (I-645) is on the November 3, 2026 ballot. Nothing changes for 2026 or 2027.
Mid-tier states
In these states the state tax on RSUs is meaningful, but the federal gap is usually the bigger issue. Rates are 2026 unless noted.
| State | Rate on RSU income | Notes |
|---|---|---|
| Massachusetts | 5% flat | Plus a 4% surtax on income above about $1.1 million. |
| Georgia | 4.99% flat | Cut from 5.19%, retroactive to January 1, 2026. |
| Virginia | 5.75% | Top rate from $17,000 of taxable income. |
| Illinois | 4.95% flat | |
| Colorado | 4.4% flat | Can be temporarily reduced in years with TABOR surplus refunds. |
| Michigan | 4.25% flat | Some cities, such as Detroit, add a local income tax. |
| North Carolina | 3.99% flat | Cut from 4.25% in 2025. |
| Kentucky | 3.5% flat | Cut from 4% in 2025. |
| Pennsylvania | 3.07% flat | Many municipalities add a local earned income tax; Philadelphia's is especially high. |
| Indiana | 2.95% flat | Plus county income tax. |
| Ohio | 2.75% | Flat rate on income above $26,050 from 2026. |
| Arizona | 2.5% flat | Withholding is the percentage you elect on Form A-4 (2.0% by default). |
Flat-tax states usually withhold their flat rate at vest, so the state side is close to correct. Example: in Massachusetts, a $100,000 vest at a $200,000 salary owes $5,000 in state tax and has $5,000 withheld; the federal shortfall of about $9,400 is the real gap.
Moving states with unvested RSUs
This is where most people get caught. States like California and New York generally allocate RSU income by where you worked between the grant date and the vest date, not just where you live on vest day.
California's usual method: California workdays between grant and vest ÷ total workdays between grant and vest = the share of each vest California taxes. Example: a grant on January 1, 2024, a move to Texas on January 1, 2026, and a vest on January 1, 2027. Two of the three years were worked in California, so California taxes about two-thirds of that vest, even though you lived in Texas when it vested.
If you're planning a move with a large unvested grant: document your move date, keep a record of where you worked each day, keep filing nonresident returns where required, and get a CPA's opinion on the allocation in the year you move.
Which state is best for RSU income?
Purely on tax, the nine no-wage-tax states. Washington (Seattle area: Amazon, Microsoft) and Texas (Austin area: Dell, Tesla) have the most tech employers among them. The saving depends on your income: at a 9.3% California rate, every $100,000 of RSU income costs about $9,300 in state tax that a Texas or Washington resident doesn't pay.
Wherever you live, pre-tax 401(k) and HSA contributions lower the taxable income your RSUs stack on top of, which can reduce both federal and state tax.