Glossary
Payroll

State Withholding

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

State withholding is the amount of state income tax an employer deducts from an employee's wages and remits to the state tax agency.
State withholding refers to the portion of an employee’s wages that an employer is required to withhold and remit to the state government to cover the employee’s state income tax liability. The specific rate and rules vary by state, and some states do not have income tax withholding requirements at all. Employers must determine the correct withholding amount based on state-specific tax tables and the employee’s withholding allowances. Proper state withholding ensures compliance with state tax laws and avoids penalties for both the employer and employee. Employers are responsible for timely depositing withheld amounts and filing required state tax forms, which may be due quarterly or annually depending on state regulations.

Key Takeaways

  • State withholding varies by state and employee details
  • Employers must remit withheld taxes to the state
  • Noncompliance can result in penalties
  • Aplos streamlines payroll tax tracking for nonprofits

Why It Matters

Accurate state withholding is crucial for compliance and to avoid tax penalties.

Real World Example

A nonprofit organization in California hires a new staff member. When running payroll through Aplos, the payroll module calculates the appropriate amount of state income tax to withhold from the employee’s paycheck, based on California’s tax tables and the employee’s submitted allowances. The withheld amount is then remitted to the California Franchise Tax Board as required. By using Aplos, the organization ensures that state withholding is calculated correctly, reports are generated for filing, and deadlines are met, helping avoid costly penalties and maintain compliance with state regulations.

How Aplos Helps

Aplos provides payroll management tools that help nonprofit organizations calculate, withhold, and track state taxes accurately. Users can generate payroll reports and maintain compliance with state tax requirements directly within the Aplos platform, facilitating easier payroll processing and recordkeeping.
launch trading trade finance startup icon

Try it yourself. Start your 15 day free trial

No commitment or credit card required.

Try it For Free

Frequently Asked Questions

What is state withholding?

State withholding is the deduction of state income tax from an employee's wages by the employer, which is then remitted to the state tax authority.

How do employers determine the correct state withholding amount?

Employers use state-provided tax tables and consider each employee’s allowances and residency status to calculate the correct withholding.

What happens if state withholding is calculated incorrectly?

Incorrect withholding can result in tax penalties for the employer and potential underpayment or overpayment of taxes for the employee.

Does every state require income tax withholding?

No, some states do not have state income tax, so no withholding is required in those states.

How does Aplos help with state withholding?

Aplos automates the calculation, tracking, and reporting of state withholding, keeping nonprofits compliant with state payroll tax laws.

Related Terms

Form 1023-EZ
Fund Closeout
Encumbrance
Custom Report Builder
Peer-to-Peer Fundraising
Capital Campaign

Aplos has everything you need in one place for streamlined nonprofit and church management.

Start A Free Trial

Copyright © 2025 Aplos Software, LLC. All rights reserved.

Aplos partners with Stripe Payments Company for money transmission services and account services with funds held at Fifth Third Bank N.A., Member FDIC.

Aplos

Our StoryTeam AplosCareersReviewsContact UsSecurity

Resources

AcademyAPIPartnershipsReferral PartnersAplos StatusAplos Glossary

Products & Features

Nonprofit SoftwareChurch SoftwareNonprofit AccountingChurch AccountingDonor ManagementNonprofit CRMOnline DonationsFundraising SoftwareText to GiveBill PayPayrollPrepaid Cards

For Customers

Support CenterTraining CenterFind An Aplos Advisor

Compare Us

Compare Quickbooks® For NonprofitsCompare Quickbooks® For ChurchesCompare Sage Intacct For Nonprofits

Services

Nonprofit Bookkeeping ServicesChurch Bookkeeping ServicesImplementation Services
Start A Free Trial

Copyright © 2024 Aplos Software, LLC. All rights reserved.

Aplos partners with Stripe Payments Company for money transmission services and account services with funds held at Fifth Third Bank N.A., Member FDIC.

Legal StuffPrivacy Policy
California Consumer Privacy Act NoticeDo Not Share My Personal Information