Must an employer withhold taxes base on where the employee lives? I think it is required if the employee lives in MA. What about UT and PA?

Tax withholding IS required on both where the client LIVES and where he WORKS.

If the tax rate for the state where he WORKS is bigger than the where he lives, withholding for the state where he lives can be omitted because the tax credit for the taxes paid in the working state will completely offset any tax owed to the residency state.

Further, some bordering states have reciprocity agreements which allow withholding of taxes ONLY for the residency state. I know Kentucky and Ohio have such an agreement.