Kentucky Tax Guide for Employers (2026) 

Kentucky uses a flat state income tax rate, making withholding calculations straightforward. The state has reciprocal tax agreements with several neighboring states, which can affect withholding for employees who live in one state and work in another. 

Kentucky imposes a flat state income tax of 4.0% on all taxable wages. The calculation is simple—just apply the flat rate to taxable wages. Kentucky has reciprocal agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin, meaning employees from those states working in Kentucky may be exempt from Kentucky withholding. 

Kentucky supports the following supplemental calculation methods. When using the flat method, the supplemental rate is 4.0%. 

Your assigned SUTA rate will be based on your company’s experience with unemployment claims. New employers typically start at the default rate of 2.7%. 

Many Kentucky cities and counties impose local occupational taxes. Louisville, Lexington, and other cities have their own rates. Register with the applicable locality.

Follow these steps to begin withholding Kentucky payroll taxes for your employees: 

1. Obtain your Federal EIN at irs.gov
2. Register with the Kentucky Department of Revenue at revenue.ky.gov
3. Register for SUTA with the Kentucky Career Center at kcc.ky.gov
4. If operating in local tax jurisdictions, register with the applicable city/county
5. Submit a Netchex tax team request to enable Kentucky SIT, local taxes, and SUTA
6. Have each employee complete their tax forms with an automated onboarding task in Netchex, digitally storing tax forms
7. Configure any additional tax settings in the employee profile

Once setup is complete in Netchex, the system will automatically calculate, withhold, and remit all Kentucky payroll taxes on your behalf. 

The following are general filing and deposit deadlines for Kentucky payroll taxes. Deadlines may vary based on your employer size and deposit frequency. Always verify current schedules at Kentucky Department of Revenue. 

Note: Deadlines are subject to change. Always confirm current requirements directly with Kentucky Department of Revenue at https://revenue.ky.gov/Business/Withholding-Tax/Pages/default.aspx. 

The following official resources will help you stay current on Kentucky payroll tax requirements: 

• Kentucky Department of Revenue
• Kentucky DOR Withholding
• Kentucky Form K-4

Does Kentucky have local payroll taxes? 

Yes. Many Kentucky cities and counties impose local occupational taxes. Louisville, Lexington, and others have their own rates. 

What form do Kentucky employees complete? 

Employees complete Kentucky Form K-4, the Kentucky’s Employee’s Withholding Exemption Certificate. 

What is Kentucky’s flat income tax rate? 

Kentucky’s flat income tax rate is 4.0% as of 2024. 

What is Kentucky’s SUTA wage base? 

Kentucky’s SUTA wage base is $11,400 per employee per year. Verify at kcc.ky.gov. 

What is Kentucky’s supplemental withholding rate? 

Kentucky uses a flat supplemental withholding rate of 4.0%.