Live in Delaware, Work Remotely for a Kentucky Employer: Who Taxes You?
Answer
Your home state takes it and the work state does not. Kentucky levies no tax on wages; Delaware taxes residents on all income regardless of where it was earned. The result is a single Delaware resident return covering the full amount, with no offsetting credit.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Kentucky takes nothing, but Delaware still taxes residents on income earned anywhere, so the full amount lands on your Delaware return.
Kentucky also has a layer below the state one, and it is the layer that survives every agreement: Kentucky cities, counties and school districts levy occupational licence taxes on wages earned in their jurisdiction. Reciprocity does not reach them, and the home state's credit generally does not either — a reciprocal-state resident working in Kentucky still pays the local tax.
What you file
- 1Resident return · Delaware
File a Delaware resident return reporting all of your income.
The two states, side by side
| Delaware | Kentucky | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 7 (Form 42A809) |
| Convenience rule | Yes — general rule | No |
| Nonresident return | Form PIT-NON | Form 740-NP |
| Credit for other-state tax | Schedule I (Form PIT-RES) | Schedule ITC |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | Yes |
| Revenue department | Delaware Division of Revenue | Kentucky Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Kentucky and working in Delaware gives:Convenience-of-the-employer rule — both states tax you.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Delaware → KentuckyBoth states — credit offsets the double tax
- 1099 contractor: Delaware → KentuckyHome state, plus the client state if you work there
- Moved mid-year: Delaware → KentuckyTwo part-year returns
Other Delaware pairs
Questions people actually ask
I live in Delaware and work remotely for a Kentucky employer. Which state do I pay?
Your home state takes it and the work state does not. Kentucky levies no tax on wages; Delaware taxes residents on all income regardless of where it was earned. The result is a single Delaware resident return covering the full amount, with no offsetting credit.
Which state should my employer be withholding for?
Delaware. Your employer should withhold Delaware tax rather than Kentucky tax on these wages. If a Kentucky line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Kentucky employer's location alone create a Kentucky tax obligation?
No. Kentucky sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Kentucky are a different matter — those are Kentucky-source income and can require a nonresident return.
How current is this?
The Delaware and Kentucky rules on this page were last checked against Delaware Division of Revenue and Kentucky Department of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Delaware Division of Revenue — individual income taxaccessed 2026-08-07
- Kentucky Department of Revenue — individual income taxaccessed 2026-08-07