NUA State Income Tax treatment (PA, NJ, NY in particular)
Hi,
How do states treat NUA of employer stock upon distribution from qualified plan? Do all states follow the Federal treatment of only currently taxing the basis? Or do some/all states ignore NUA treatment and apply tax on full market value at the time of distribution?
If states vary in their treatment, is anyone familiar with how Pennsylvania treats NUA? New Jersey? New York?
Thanks!
-Dave
Permalink Submitted by Alan Spross on Fri, 2007-12-14 03:27
Dave,
I cannot give you a documented answer, however I have never heard of any state not conforming to the federal rules with respect to NUA provisions. That said, very few states provide a lower rate on LT gains than on ordinary income, so on balance the states do comparatively well vrs the federal on NUA when the NUA shares are sold.