This is based on reciprocal agreements between Illinois and these states. Employers are expected to withhold state income tax from an employee's wages if that employee is subject to state income tax unless noted below.Each state has different tax rules regarding payroll withholding for out-of-state employees. Here's what to know about managing out-of-state employees. This chart provides an overview of withholding and filing rules for nonresident employees in each state and the District of Columbia. The laws of the two states where you live and work will determine how you file taxes if you don't live in the state where you work. This guide provides information on how state tax reciprocity agreements work and which states currently have agreements in place. A state W-4 Form is a tax document that serves as a guide for employers to withhold a specific amount on each paycheck to go towards state taxes. Like every other state, Nevada-based employers are required to withhold a part of their employees' wages for federal income taxes. If your work state has one of these agreements, you'll need to fill out an exemption form.