Workday allocation
Also: workday allocation, equity workday allocation, workday ratio
The method most states use to source equity compensation income across multiple states: the ratio of workdays in a state during the vesting period to total workdays in that same period.
Workday allocation is the formula that multi-state filers apply to RSU, NSO, and PSU income to determine how much is sourced to each state. The numerator is the number of workdays in a particular state between grant and vesting. The denominator is total workdays across all states during the same window. The resulting fraction is applied to the total wage income for that vest. States with workday sourcing include California, New York, and New Jersey. Some states use a calendar-day method.
Example: an engineer with a 2022 grant vesting in 2026 worked 500 days in California and 500 days in Texas during the 1,000 workdays of the vesting period. A $400,000 vest is sourced 50% to California, producing $200,000 of California-source wages. Texas imposes no state income tax on its share.
Common mistake: using residence on the vest date as the only criterion. Moving to a no-tax state one week before a vest does not change the source-state allocation on pre-move workdays.
Workday allocation matters at every multi-state RSU vest, during the first and last year in each state, and when modeling tax exposure before an accepted relocation.