The Kentucky Department of Revenue has released revised 2018 withholding tables and computer formula effective with tax years after January 2018. The revision was made in response to the recently enacted legislation replacing the graduated personal and corporate income tax tables with a flat income tax rate of 5%. The previous individual income tax brackets ranged from 2% to 6% and corporate income tax rates ranged from 4% to 6%. The revised withholding tables are effective with wages paid on and after June 1, 2018 and employers are not required to retroactively adjust the withholding. The standard deduction for 2018 is $2,530; this is an increase from the 2017 standard deduction amount of $2,480.
In addition to the revised withholding tables, there are no longer any withholding tax exemptions allowed and Form K-4 for tax years beginning on and after January 1, 2018. Therefore, Kentucky Department of Revenue Employee’s Withholding Exemption Certificate will no longer apply and the agency plans to remove the Form K-4 from their website soon.
Employers are highly encouraged to not collect Forms K-4 from new employees and disregard any previously provided Forms K-4 beginning January 1, 2018. The agency plans to update the employer withholding tax guide in accordance to the new flat rate changes and elimination of the withholding exemptions.
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This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.