Estimate take-home pay for out-of-state commuters working in Kentucky who are exempt from state income tax under reciprocal agreements.
Kentucky · 2026 tax year · salaried or hourly
Kentucky’s 3.5% flat tax plus any city / county payroll tax.
Kentucky has reciprocal tax agreements with 7 bordering states, meaning state tax is 0% for commuters.
Reciprocity only covers state income tax — local occupational taxes still apply where you physically work.
Commuters must submit Form 740-NP (Kentucky Nonresident Return) or employer-specific withholding exemption forms.
1Enter your gross pay and pay frequency.
2Navigate to the State & Local tab and enable 'Exempt state tax under reciprocity'.
3Select your Kentucky work city or county to include the correct local occupational tax rate.
Kentucky has reciprocal agreements with Indiana, Ohio, Illinois, West Virginia, Virginia, Michigan, and Wisconsin. Residents of these states who work in Kentucky only pay income tax to their home state.
Yes. Tax reciprocity agreements only apply to state income taxes. They do not exempt out-of-state workers from local city or county occupational taxes, which are withheld based on where the work is performed.