Live in Hawaii, Work Remotely for a Kentucky Employer: Who Taxes You?
Answer
Only Hawaii taxes you. Kentucky levies no personal income tax on wages, so nothing is withheld there and you file no Kentucky return. Hawaii taxes its residents on all income wherever earned, which means your Kentucky earnings go on a Hawaii resident return in full.
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 Hawaii still taxes residents on income earned anywhere, so the full amount lands on your Hawaii 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 · Hawaii
File a Hawaii resident return reporting all of your income.
The two states, side by side
| Hawaii | Kentucky | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 7 (Form 42A809) |
| Convenience rule | No | No |
| Nonresident return | Form N-15 | Form 740-NP |
| Credit for other-state tax | Schedule CR | Schedule ITC |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Hawaii Department of Taxation | Kentucky Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Kentucky and working in Hawaii gives:Home state only.
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: Hawaii → KentuckyBoth states — credit offsets the double tax
- 1099 contractor: Hawaii → KentuckyHome state, plus the client state if you work there
- Moved mid-year: Hawaii → KentuckyTwo part-year returns
Other Hawaii pairs
Questions people actually ask
I live in Hawaii and work remotely for a Kentucky employer. Which state do I pay?
Only Hawaii taxes you. Kentucky levies no personal income tax on wages, so nothing is withheld there and you file no Kentucky return. Hawaii taxes its residents on all income wherever earned, which means your Kentucky earnings go on a Hawaii resident return in full.
Which state should my employer be withholding for?
Hawaii. Your employer should withhold Hawaii 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 Hawaii and Kentucky rules on this page were last checked against Hawaii Department of Taxation 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.
- Hawaii Department of Taxation — individual income taxaccessed 2026-08-07
- Kentucky Department of Revenue — individual income taxaccessed 2026-08-07