I live in NY but work for an employer based in MA. My W2 lists my state as NY and my employer pays state taxes to NY. Is this MA source income?

[MinhT1]

Your income is NY sourced income. Your employer has correctly withheld NY taxes.

[rjs]

You didn't say which state you work in. It doesn't matter where your employer is "based." What matters is where you work. If you work in New York your pay is New York source income, and your W-2 is correct. It doesn't matter if the company that is paying you is in Massachusetts. But if you work in Massachusetts, then your pay is Massachusetts source income. If that's the case, your employer should be withholding Massachusetts tax and showing Massachusetts wages and tax on your W-2.

MinhT1 assumed that you work in New York, but you didn't say that.