What Is the W2 State Withholding Box?
Gain a clear understanding of your W-2's state tax section and how those figures connect your payroll deductions to your annual state tax return.
The Form W-2, Wage and Tax Statement, summarizes your annual earnings and the taxes paid from your paycheck. While it includes federal data, a specific section is for state-level taxes. This article explains the state withholding boxes, what the figures mean, and how they are used when you file your state tax return.
Understanding the State Information on Your W2
The lower portion of your W-2 is for state and local tax reporting, with Boxes 15, 16, and 17 containing information for your state tax return. Box 15 displays your employer’s state identification number, the unique number assigned by the state’s tax agency for reporting. This box also includes the two-letter abbreviation for the state.
Box 16 shows your “State wages, tips, etc.” This is the portion of your income subject to that state’s income tax laws. This amount can differ from the federal wages in Box 1. For example, some states do not tax certain pre-tax contributions to retirement plans, making your state wages lower than your federal wages.
Box 17 reports the “State income tax” withheld. This figure is the total amount your employer deducted from your paychecks for state taxes during the year. This is not a tax bill, but a record of payments made on your behalf toward your annual state tax liability.
The Source of Your State Withholding Amount
The amount in Box 17 results from information you provide to your employer. When starting a new job, you fill out a form to determine your tax withholding. Many states have their own form, while some use the federal Form W-4 for state purposes. On this form, you provide details like your filing status and the number of dependents you claim.
For each pay period, your employer uses this information and state-provided withholding tables to calculate the correct amount of state income tax to deduct. The amounts withheld are accumulated throughout the year. If you need to adjust your state tax withholding, you can submit a new form to your employer at any time.
Applying State Withholding to Your Tax Return
When filing your annual state income tax return, you will transfer the wage amount from Box 16 and the tax withheld amount from Box 17 to the corresponding lines on your state tax form. Your state tax return calculates your total tax liability for the year based on your income, deductions, and credits. This total liability is then compared against the amount of state tax you already paid, as reported in Box 17. If the amount withheld is more than your total tax liability, you will receive a state tax refund. If the amount withheld is less than your liability, you will owe additional tax to the state.
Handling Special State Withholding Situations
If you work in a state that does not have a state income tax, Boxes 15, 16, and 17 will be left blank. This is normal and simply indicates that no state income tax was required to be withheld from your pay.
You might also see information for more than one state listed on your W-2. This typically occurs if you worked for the same employer in multiple states during the tax year. You will likely need to file a separate state tax return for each state listed.
If you believe the wage or withholding information in Box 16 or Box 17 is incorrect, contact your employer’s payroll or human resources department. They can review your records and, if an error is confirmed, issue a Form W-2c, Corrected Wage and Tax Statement.