Wondering what state tax calculation to use?

The proper state tax calculation to select for each employee is the state the employee is physically in when they perform services for the employer. Period.

Where the employer is located and where the employee resides (claims domicile) is of no significance! Employee "requests" to withhold for a state other than where the work is performed should be refused.

If, for example, the employee lives in NJ, but works in NY, you should be withholding NY taxes. The employee should be able to handle their own finances, including filing a non resident return in NY, and a resident return in NJ. An employer should not burden themselves with registering and reporting to another state only for the employee's benefit.