What Is Box 17 on Your W-2 for State Income Tax?
Understand the state income tax information on your W-2. This guide clarifies the role of Box 17 and its direct impact on your state tax return calculation.
Employers must issue a Form W-2, Wage and Tax Statement, to their employees and the Internal Revenue Service. This document summarizes an employee’s annual earnings and the specific amounts of federal, state, and other taxes withheld from their pay. It is a foundational report for an individual to accurately prepare their income tax returns.
Understanding Boxes 15, 16, and 17
The section of your W-2 for state taxes provides a complete picture of your earnings and withholdings for a specific state. Box 15 contains your employer’s state identification number and the two-letter abbreviation for the state where you earned the wages. This ensures the tax information is correctly attributed to the proper state taxing authority.
Box 16 reports the total wages, tips, and other compensation subject to a particular state’s income tax. This figure may differ from the federal wages in Box 1 because states have varying rules about what income is taxable and which pre-tax deductions, like contributions to retirement plans or health savings accounts, can reduce the taxable amount.
Box 17 shows the total amount of state income tax withheld from your paychecks during the year. This figure represents the sum of all state tax payments made by your employer based on the wages in Box 16. The information in these three boxes works together to provide a clear record for each state where you have a tax obligation.
How Box 17 Affects Your State Tax Return
The number in Box 17 is used for completing your state income tax return. When you file, this figure is transferred to the payments section of your state tax form. It serves as a record of the total state income tax you have already paid through payroll deductions.
This amount is used to calculate your final tax outcome. Your state tax return will determine your total tax liability based on your income and the state’s tax rules. The figure from Box 17 is subtracted from this total liability. If the amount in Box 17 is greater than your tax liability, you will receive a state tax refund. If it is less than your tax liability, you will owe the remaining balance to the state.
Common Scenarios and Discrepancies
It is not unusual for Box 17 to be empty. This occurs if you work in a state that does not levy a personal income tax. In such cases, Boxes 16 and 17 will be blank because no state wages were subject to tax and no tax was withheld.
If you worked for one employer but performed services in multiple states, your W-2 will reflect this. You will see a distinct set of entries for Boxes 15, 16, and 17 for each state where you earned wages and had taxes withheld. This ensures income is reported and taxes are credited to the correct jurisdictions.
If you believe the amount in Box 17 is incorrect, contact your employer’s payroll or human resources department. They can review their records and verify the withholding amount. If an error is confirmed, your employer is required to issue a Form W-2c, Corrected Wage and Tax Statement, which you will use to file an accurate tax return.