No, you can only subtract the amount that was taxable on your federal return, up to your share of the $20k maximum. And yes, it applies to IRAs.
If you received a decedent’s pension and annuity income, you may make this subtraction if the decedent would have been entitled to it, had the decedent continued to live, regardless of your age.
If any portion of this exclusion was subtracted on the decedent’s personal income tax return, you must first reduce the amount you are eligible to claim by the same amount subtracted on the decedent’s return. The total pension and annuity income exclusion claimed by the decedent and the decedent’s beneficiaries cannot exceed $20,000.
If there is more than one beneficiary:
- the exclusion is prorated in the same ratio as the distribution, and
- the total exclusion claimed by all beneficiaries may not exceed $20,000
See NY - Common Q & As
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