Say I sold a small amount of stock that qualifies for section 1202. Does this reduce my New York taxable income, or just the federal capital gains amount?
In general, states with rolling conformity will follow this change. States with specific date conformity will continue to follow the date of conformity currently in effect and will not follow the change. A few states may have their own QSBS rules and will not conform to or be impacted by this provision of the Act. The chart that follows summarizes these principles as applied to the enumerated states:
STATE: QSBS Exclusion Conformity: California statutes refer to the IRC QSBS provisions but modify and limit their applicability, and would not be impacted by this provision of the Act.
However, California’s provisions were ruled unconstitutional in recent litigation and the California Franchise Tax Board has recently taken the position that gain exclusions and deferrals will be denied for all open tax years.
Florida Florida does not impose an income tax on individuals and therefore this provision of the Act is inapplicable and will have no impact.
Illinois Due to its rolling conformity, Illinois follows this provision of the Act.
Because New York effectively provides for rolling conformity to the IRC, through reference to federal adjusted gross income as the state starting point, New York effectively follows this provision of the Act.
Texas does not impose an income tax on individuals