state tax higher than federal, why?

Because federal allows deductions and his home state does not.

Say he earns $1,200 a year. In PA his tax would be $37. I will let you determine what his federal tax would be.

As AM noted it will depend upon the State in question and what they allow for deductions as in some cases the Federal Deductions that a client obtains are not deductible by the state where they live

Because he lives in a state that sucks.

Are you asking about the tax liability on the returns or are you asking about the withholding from the paycheck using quickbooks?

Since I cannot see either tax return, I suggest you review both, check for errors and then explain to your employee what Federal deductions and credits are not allowed by the state and what income is taxable to the state and not the Federal.