Employee State Taxes

This guide provides instructions for setting up and managing employee state tax information in BambooHR. It emphasizes the importance of accurate employee location data for tax calculations. Key sections include verifying employee locations, updating work addresses, and managing state tax withholding and unemployment insurance. Specific state requirements are outlined, such as Iowa's new W-4 form and Louisiana's flat tax rate. Additional topics cover local tax requirements, exemptions, and reinstating employee taxes. The guide also highlights the need for employers to keep tax information current, especially when employees move or when state regulations change. For further assistance, links to additional resources are provided throughout the document.

Jul 8, 2026
Knowledge

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How do I set up and manage employee state tax information?

Purpose: This help guide will show you the information you need to set up state tax withholding and state unemployment insurance information in BambooHR.

Table of Contents

Verify the locations of employees
- Updating work locations via Employee Fields
- Updating employee location on the Job Information table
State taxes on the Pay Info tab
State taxes in the New Hire Packet
Unique tax setups by state
What if my state requires local taxes?
- Exempting and reinstating employee taxes

Verify the locations of employees

Accurate location information is crucial for the calculation of state taxes. Depending on your access, you can verify and update this information right from the employee's Payroll Info tab using the Manage Home and Manage Work buttons. If you need to make additional changes to work locations, update work addresses via Employee Fields and assign the proper location via the Job Information table.

Updating work locations via Employee Fields

Navigate to Employee Fields in Settings and review Location information. Make sure all locations are named correctly and have the correct address listed. If you have a remote location, make sure it is marked as remote in the location settings. Remote locations will use the employee's home address, so you will need to verify that the home addresses of those employees are correct.

Updating employee location on the Job Information table

Once you verify your locations in Settings, it's important to then assign a location to each of your employees under the Job Information Table. BambooHR uses the Location field to determine how to properly tax your employees. You can update this information in bulk using the Power Edit tool, by making individual updates on the employee's Job tab, or if your access permits, on the Pay Info tab.

For New York employers subject to MCTMT, employee job locations are also used to determine Zone 1 and Zone 2 wage reporting for MCTMT calculations.

State taxes on the Pay Info tab

Want to enable access for your employees to view or edit their own state tax information? Click here to learn more! Need help filling out federal taxes for your employees? Click here!

1. State Tax Withholding: Click Location and select Work or Home. An employee's work location should be where they spend the most time working.

If selecting Work, the employee's assigned location in the Job Information table on the Job tab will determine which location and the associated address to use when calculating the employee's state tax withholdings.
If selecting Home, the employee's home address on the Personal tab will calculate the employee's state tax withholdings.

Depending on which state is associated with a specific location, different fields will show up for completion under the Location field:

Filing Status: Based on how the employee completes their state tax withholding form, you will need to use the appropriate state filing status code provided by that state in this field. BambooHR will automatically populate the state's filing codes for you to choose from. This may not apply to every state.
Exemptions: You will enter the number of exemptions that apply to an employee based on their state W-4 in this field. If the employee has no exemptions, you should enter 0 in the Exemptions field for the employee.
Additional Withholding: If a state allows for additional withholding and the employee has elected it on their state W-4, you will enter the number that reflects an additional withholding amount or percentage. If an employee does not have additional withholdings, please enter 0 into this field.
Additional Allowances: Certain states allow for tax options that include additional allowances. If an employee is part of a state that allows this and indicates these additional allowances on their state W-4 form, you can enter the number of allowances in this field. Keep in mind, this is separate from exemptions.
Ignore filing status/other adjustments: By checking this box, BambooHR will withhold $0 in state taxes for the employee unless you or the employee (with access) enters an Additional Withholding amount in the field below.

2. State Unemployment Insurance: Click Location and select Work or Home. An employee's work location should be where they spend the most time working.

If selecting Work, the employee's assigned location in the Job Information table on the Job tab will determine which location and the associated address to use when calculating the employee's state tax insurance.
If selecting Home, the employee's home address on the Personal tab will calculate the employee's state tax insurance.
If the employee is exempt or needs to be excluded from state unemployment insurance, check the State UI Tax Exempt box.

If an employee moves, simply update their home address and work location to adjust their state tax deductions. You can verify their deductions via your payroll run. Please keep in mind that your employee's can only be taxed in one state during a pay period. If an employee moves in the middle of a pay period, you can create an off-cycle payroll to capture the second state tax by splitting the paycheck.

State taxes in the New Hire Packet

When adding a new employee, you can select the employee's State Tax Withholding Location and Unemployment Insurance Location.

Unique tax setups by state

Iowa state withholding

The state of Iowa changed state tax IA W-4 requirements on January 1, 2024. The state tax withholding fields are updated on the Pay Info tab and in the New Hire Packet to match the new requirements for employees with a work location in Iowa. If an employee in Iowa has exemptions or additional withholdings, they are now required to enter a dollar amount in those fields. Any existing employees who have a hire date prior to January 1, 2024 are able to view their withholdings in the pre-2024 form. However, they will be required to edit their withholdings in the new version of the state withholding form.

As of January 1, 2026, the state of Iowa introduced new filing options. Previously, one of the filing statuses was Married Filing Jointly or Qualifying Surviving Spouse. With the 2026 form, this filing status has been separated into two separate filing statuses. (1) Married Filing Jointly and (2) Qualifying Surviving Spouse. Tax calculations for these two filing statuses are the same. The state of Iowa encourages, but does not require, employees to move to the new 2026 IA W-4 form unless they are changing their State Tax Withholding elections.

If you are importing Payroll State Tax Withholding data, use the following values for column F.

Identify which version of the Iowa State Tax Withholding form applies to the employee.
- Pre-2024: Use form IA_Pre_2024_IA-W4
- January 1, 2024-December 31, 2025: Use form IA_2024_IA-W4
- 2026: Use form IA_2026_IA-W4

Louisiana state withholding

Louisiana enacted an emergency rule that changes state tax withholdings, effective January 1, 2025. The rule introduces a flat 3.09% tax rate and an increased standard deduction amount for each filing status. With this change, the claiming of Total Dependents is no longer used.

If Louisiana employees have made state tax withholdings in BambooHR before 2025, they will still see the previous tax withholding experience, including the Total Dependents and Exemptions fields. However, their information will be grayed out. To make changes to their withholdings, or if an admin accesses their profile to make changes for them, they will have to click the Make changes with the updated form fields. link found under the State Tax Withholding table.

If you are importing Payroll State Tax Withholding data, use the following values for column F.

Identify which version of the Louisiana State Tax Withholding form (L-4) applies to the employee.
- Pre-2025: For employees who set Louisiana withholdings before 2025.
- 2025: For employees using the updated form reflecting the flat 3.09% tax rate effective January 1, 2025.

Montana filing status

Due to a change in Montana's MW-4 requirements in effect on January 1, 2024, the Filing Status field is required for employees with a work location in the state of Montana before running payroll. You can choose from the following filing statuses:

Single or married filing separately
Married filing jointly or qualifying widower
Head of household

If this employee data is incomplete when starting payroll, you will be prompted to update this information before you begin payroll.

New York Metropolitan Commuter Transportation Mobility Tax (MCTMT)

Beginning June 1, 2026, BambooHR calculates New York Metropolitan Commuter Transportation Mobility Tax (MCTMT) using real-time quarter-to-date payroll totals.

Employee location and MCTMT zones

Employee job locations determine whether wages are tracked in MCTMT Zone 1 or Zone 2. Because MCTMT reporting relies on employee location data, it is important to ensure employee work locations are assigned correctly within BambooHR.

Quarterly threshold calculation

BambooHR combines quarter-to-date payroll totals from both Zone 1 and Zone 2 locations when determining MCTMT liability. Once combined payroll exceeds $312,500 during a quarter, BambooHR begins calculating MCTMT.

If the threshold is reached after payroll has already been processed during the quarter, BambooHR will automatically calculate any required catch-up tax amounts for wages previously paid during that same quarter.

Because MCTMT is a company-level tax, the calculated liability is distributed across the New York Metro employees included in the payroll run where the tax is collected. If only a small number of New York Metro employees are included in that payroll, a larger portion of the quarter's MCTMT liability may appear on those employees in payroll reporting. This does not affect the total tax owed or reported.

Viewing MCTMT payroll totals

You can review quarter-to-date payroll totals by zone within Tax Account Details. These totals are used to determine when the quarterly threshold has been met and how MCTMT liability is calculated.

Exempt employers

BambooHR does not use MCTMT exemption designations within the system. MCTMT is calculated based on New York MCTMT payroll thresholds using combined quarter-to-date payroll totals from Zone 1 and Zone 2 locations.

If you believe your organization is legally exempt from MCTMT or that the tax should not apply to your business, contact Payroll Support for assistance.

Ohio courtesy taxes

BambooHR Payroll will withhold Ohio state courtesy taxes for your employees in addition to their regular state taxes. If you prefer to collect and pay these courtesy taxes independently, you can manage this setup within Company Tax Settings in Settings > Payroll > Taxes.

Oregon local taxes

If your employees have Oregon listed as their work location and have filled out Employee OPT IN form for Metro Supportive Housing Services Tax (SHS)/Multnomah County Preschool for All Tax (PFA), this section allows you to document the amount they have indicated they would like withheld.

Please note: The amount indicated will override their SHS or PFA tax amount in Payroll.

SOC codes: Alaska, Indiana, Maine, South Carolina, Washington, and West Virginia

If you have employees working in Alaska, Indiana, Maine, South Carolina, Washington, or West Virginia, two populated fields will appear under the State Unemployment Insurance section for you to add the Standard Occupational Classification (SOC) code and category. You must fill out the SOC code and category fields for employees working in these states before opening payroll.

If your employee is in South Carolina, the dropdown options will populate with the options designated by the state.

You can also add these fields in the employee's Taxes section in TRAXPayroll.

Vermont Child Care Contribution Tax

The Vermont Child Care Contribution (VT - Child Care EE & ER) tax allows you to set up your employees to pay part of the tax responsibility. To set this up in BambooHR, navigate to the Settings > Payroll > Taxes. The employer tax rate will default to .44% and will only change if you update the percentage in the Employee Pays field.

The Employee Pays field is required and will be empty by default. This amount must be a whole number percentage between 0-25. When entering an amount above 0, the tax rate shown in the Tax Rate field adjusts according to the percentage entered (i.e. if you enter 25%, then the tax rate changes from .44% to .33%). Saving this information will activate the employer (VT - Child Care -ER) tax and create an active employee (VT-Child Care - EE) tax in Taxes Settings. If you enter 0, then only the employer (VT - Child Care - ER) tax account is created. You will receive an error if they try to save without entering an amount.

You can remove or end the VT-Child Care-ER tax but please keep in mind this will also remove/end the active employee tax account tied to it as well (VT-Child Care-EE).

What if my state requires local taxes?

Some states require local taxes. Watch this video if you're unsure if your employee requires local taxes.

The new employer tax rate will automatically populate for applicable taxes. You will be responsible for confirming or updating the tax rate based on what the state has provided to your company.

Exempting and reinstating employee taxes

If you wish to exempt employees from certain local taxes, payroll users with access to the EIN in TRAXPayroll. Log in to TRAXPayroll, and then navigate to Employee > select Employee Name (of the employee you wish to update) > and select Tax. Under the Potential Tax List table, check the box next to the tax name(s) you wish to list as exempt for the employee and then click the Exclude Tax Selected button. If a tax is not listed, please reach out to Payroll Support.

To reinstate an employee-specific tax, to Employee > select Employee Name (of the employee you wish to update) > and select Tax. Scroll to the bottom to find the 'Your Excluded Tax List' table underneath the Potential Task List table. From here the, excluded taxes can be deleted or edited.