Estimate take-home pay for commuters from Ohio, Indiana, and reciprocal states working in Kentucky with Form 42A809 state tax exemptions.
Under Kentucky's reciprocal tax agreements with seven neighboring states (Indiana, Ohio, Illinois, West Virginia, Virginia, Michigan, and Wisconsin), residents of these states commuting to jobs physically located in Kentucky owe 0% Kentucky state income tax. However, reciprocity does NOT exempt commuters from local city or county occupational taxes (e.g. Louisville's 1.45% non-resident rate or Covington's 2.45% fee), which are withheld where wages are physically earned.
Kentucky · 2026 tax year · salaried or hourly
Kentucky’s 3.5% flat tax plus any city / county payroll tax.
Kentucky maintains formal reciprocal tax agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin.
Commuters must file Kentucky Revenue Form 42A809 (Certificate of Nonresidence) with their Kentucky employer to stop Kentucky state tax withholding.
Reciprocity applies exclusively to state income tax; municipal and county occupational license fees are still legally required wherever work is performed in Kentucky.
Commuter income remains fully taxable in your home state, meaning you must set up home-state withholding or make quarterly estimated payments.
1Enter your annual salary or hourly rate and select your regular pay frequency (weekly, bi-weekly, semi-monthly, or monthly).
2Under the State Taxes tab, toggle 'Exempt from Kentucky State Tax under Reciprocity (Form 42A809)' to Yes.
3Select your Kentucky job site city to incorporate local occupational taxes (such as Louisville, Florence, or Covington) and review your true commuter take-home pay.
Kentucky maintains active reciprocity agreements with seven states: Indiana, Ohio, Illinois, West Virginia, Virginia (with conditions regarding daily commuting), Michigan, and Wisconsin. If you live in one of these states and commute to work in Kentucky, you do not owe Kentucky state income tax on W-2 wages.
You must complete and submit Kentucky Department of Revenue Form 42A809, titled 'Certificate of Nonresidence.' Giving this completed form to your Kentucky employer's payroll office certifies that you are an out-of-state resident and legally exempts your earnings from Kentucky state income tax withholding.
Yes. Reciprocal agreements govern only state-level personal income taxes administered under KRS Chapter 141. They provide zero exemption from city or county occupational license fees. An Ohio resident working in Covington still pays the 2.45% Covington city tax plus Kenton County fees.
If Kentucky state tax was withheld by mistake, you must file a Kentucky Nonresident and Part-Year Resident Individual Income Tax Return (Form 740-NP) at year-end. By reporting zero Kentucky taxable wages under the reciprocity rule and attaching your Form W-2, you can claim a 100% refund of all Kentucky state taxes withheld.
Yes. Reciprocity eliminates double taxation by ensuring you only pay state income tax to your state of residence. You should ask your Kentucky employer to withhold your home state's income tax (e.g. Indiana or Ohio), or you must remit quarterly estimated payments to your home state's treasury.
Under the Kentucky-Indiana reciprocal agreement, your wages earned across the Ohio River in Indiana are exempt from Indiana state income tax. You submit Indiana Form WH-47 (Certificate of Residence) to your Indiana employer so they withhold Kentucky state income tax (3.5%) rather than Indiana tax. However, Indiana county taxes (e.g. Clark County local income tax) may still apply, and reciprocity does not alter federal or FICA withholdings.
In Kentucky, local occupational license fees are levied based on where you physically work (your job site), not where you live. If your physical job site is in Louisville, your employer must withhold Louisville's occupational fee (1.45% non-resident rate if you live outside Jefferson County). You do not owe Bowling Green city tax on wages earned in Louisville.