Employees who work in a locality with state income tax must fill out a withholding form. Learn which state W-4 form your employees must use.Hey Buddy Buck here! Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Give Form W-4 to your employer. Getting answers to your tax questions. Getting tax forms, instructions, and publications. Report how much you withheld for state income tax in Box 17. If you did not withhold state income tax, leave Box 17 blank. 020) since January 1, 1995.