State Withholding Tax
Most states have income taxes as well. If your business is located in a state with income taxes, you’ll play tax collector for the state, too.
Some states base their income tax on a percentage of the federal withholding amount; other states use tables or percentage methods similar to the federal withholding. In addition to the W-4 at the federal level, the employee may also need to complete a similar form to declare state withholding allowances.