Kentucky Wage and Payroll Tax Facts
February 02, 2024
Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Kentucky.
Select a state or federal tax guide
Kentucky uses the same minimum wage rates as those required by the federal government in the Fair Labor Standards Act (FLSA). These rates are state-wide, as none of Kentucky's cities or counties have any unique minimum wage rates.
When it comes to processing payroll, Kentucky-based organizations must handle the following taxes in addition to those required by the federal government:
- Personal Income (a.k.a. State Income Tax)
- State Unemployment Insurance (SUI)
- Local Taxes
The below information was last updated January 30, 2024. It is not intended as legal or tax advice.
Kentucky Minimum Wage Rates
|
Wage Type |
Kentucky Rates |
Federal Rates |
|
Minimum Wage |
$7.25 |
$7.25 |
|
Tipped Minimum Wage |
$2.13 |
$2.13 |
|
Actual Tip Credit |
$5.12 |
$5.12 |
Kentucky State Income Tax (SIT) Rates
Kentucky has a flat income tax rate of 4.00%, meaning all residents pay the same amount regardless of their income levels.
|
Additional Kentucky SIT Details |
|
|
Supplemental Withholding Computation |
Combine with regular wages and apply the same 4.00% tax rate. |
|
Exemptions |
|
|
Form W-4 |
Form K-4 |
|
Reconciliation Frequency |
Annual |
Kentucky State Unemployment Insurance (SUI) Rates
SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.
|
Kentucky SUI Tax Details |
|
|
Taxable Wage Base |
$11,400 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers |
0.30% - 0.90% |
|
Rates for New Employers |
2.70% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
Yes; due within 20 days of rate notice being mailed, and no later than 120 days after January 1 |
Kentucky State Disability Insurance (SDI) Rates
SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Kentucky, however, doesn't require employers to collect an SDI tax.
Miscellaneous Kentucky Tax Information
Reciprocal Agreement(s)
Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. Kentucky currently has reciprocal agreements with the following states:
- Illinois
- Indiana
- Michigan
- Ohio
- Virginia
- West Virginia
- Wisconsin
Residents of these states must complete Form 42A809 to certify non-residency.
Paid Sick Leave (PSL) Taxes
The state of Kentucky doesn’t require employers to collect PSL taxes, nor does the state have a program providing such leave to employees.
Paid Family and Medical Leave (PFML) Taxes
The state of Kentucky doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.
Local Taxes
In addition to the state-wide taxes mentioned above, some cities have occupational taxes as well.
Kentucky Employer Registration
The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Department of Revenue for withholding tax topics and the Division of Unemployment Insurance for unemployment tax topics.
|
Registration Details |
Department of Revenue |
Division of Unemployment Insurance |
|
Phone |
(502) 564-7287 | (502) 564-2168 |
|
Online Registration |
Kentucky Online Gateway Login | Unemployment Tax Registration Process |
|
Registration Instructions |
Online registration is required. Account numbers will be issued during the online process. |
Online registration is required. Account numbers will be issued in 5-7 days via online process or in 2-3 weeks via mail. |
|
Employer Self-Service Login |
Kentucky Online Gateway Login | Kentucky's Unemployment Insurance Self-Service Web |
Additional Kansas Payroll Tax Resources
- Kentucky Business One Stop
- Department of Revenue Business Startup Checklist
- Division of Unemployment Insurance New Employer Packet
This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.
Get Taxes Done Right, Without the Stress
We know there's a lot that goes into preparing and filing payroll tax forms. Save time and get support from our expert team. As a Registered Reporting Agent with the IRS, we can help prepare and file all the necessary forms you need to remain compliant - even in the face of changing legislation. Learn more here.