as a general rule of US taxation which also applies at the state levels is all income is taxable unless specifically excluded. I could not find anything to specifically exclude a whistleblower award. however, sometimes that are specific rulings or positions taken that are not formally put into the general income tax rules. so it is possible that NYS might exclude the amount from taxation. it is certainly taxable for US tax purposes.
see this article - doesn't address the NYS question
https://www.hodgsonruss.com/blogs-whistleblowerblog,whistleblower-proceeds-taxable-income#:~:text=Wh...
you could call the NYS Department of Revenue to get an answer. However, believe it or not, there's no guarantee you'll get a correct answer. if the agent tells you it's not taxable but it really is the state is not bound by what the agent tells you.
also true if you ever call the IRS and get a wrong answer. the IRS is not bound by it.
if you got the award in 2021, you'll know for certain it's taxable if NYS issues you a 1099
read the following to see if you can exclude any attorney fees paid from the award
IRC section 62 (a)
For purposes of this subtitle, the term “adjusted gross income” means, in the case of an individual, gross income minus the following deductions:
62(a)
(21)Attorneys’ fees relating to awards to whistleblowers
(A)In general
Any deduction allowable under this chapter for attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any award under—
(i)section 7623(b), or
(ii)in the case of taxable years beginning after December 31, 2017, any action brought under—
(I)section 21F of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6),
(II)a State false claims act, including a State false claims act with qui tam provisions, or
(III)section 23 of the Commodity Exchange Act (7 U.S.C. 26).
