What state should my employee be taxed in?

Employers are only required to withhold employee state income tax from the state in which the employee works.  It is at the employer’s discretion, if they wish to withhold and remit state income tax to an employee’s home state if it differs from the work state.

 State unemployment too, should be withheld and reported to the state in which the employee works.  If you have an employee who works in multiple states, please see the Multistate reporting section of the help desk for further assistance.