Live in Kentucky, Work in Ohio: Which State Taxes Your Paycheck?
Answer
Ohio withholding is switched off by agreement. Kentucky and Ohio hold a reciprocal arrangement covering wages, so as a Kentucky resident you file Form IT 4NR with your Ohio employer, have Kentucky tax withheld instead, and file the Kentucky resident return alone.
Last verified
A reciprocity agreement is a deal between two revenue departments about which of them withholds. Around thirty such agreements exist across sixteen jurisdictions, and Kentucky and Ohio hold one — which is why this commute produces one return instead of two.
Ohio does not tax the wages of residents of Indiana, Kentucky, Michigan, Pennsylvania or West Virginia. The employee files Form IT 4NR, Employee's Statement of Residency in a Reciprocity State, with the Ohio employer, who must keep it on file. Ohio folded IT 4NR into the combined Form IT 4 in December 2020, so the linked PDF carries both — the reciprocity declaration is the section headed Statement of Residency.
The certificate goes to your employer's payroll department, not to Ohio Department of Taxation, and it is not retroactive — filing it in June does not recover Ohio tax withheld in January. That money comes back only by filing a Ohio nonresident return for the year and claiming a refund.
Ohio also has a layer below the state one, and it is the layer that survives every agreement: Ohio has the densest local income tax in the country: several hundred municipalities levy a municipal income tax, and many school districts levy their own on top. Neither is covered by the reciprocal agreements. A Pennsylvania resident working in Columbus pays no Ohio state tax and full Columbus city tax.
What you file
Give your employer Form IT 4NR so Ohio stops withholding. This goes to the employer, not to Ohio Department of Taxation — and it is not retroactive, so file it before the first paycheck of the year.
- 2Resident return · Kentucky
File a Kentucky resident return reporting all of your income, including the wages earned in Ohio.
The two states, side by side
| Kentucky | Ohio | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — graduated |
| Reciprocity partners | 7 (Form 42A809) | 5 (Form IT 4NR) |
| Convenience rule | No | No |
| Nonresident return | Form 740-NP | Form IT 1040 with Schedule IT NRC |
| Credit for other-state tax | Schedule ITC | Ohio Schedule of Credits (resident credit) |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | Yes |
| Revenue department | Kentucky Department of Revenue | Ohio Department of Taxation |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Ohio and working in Kentucky gives:Reciprocal agreement — file the exemption form.
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.
- Remote worker: Kentucky → OhioHome state only
- 1099 contractor: Kentucky → OhioHome state, plus the client state if you work there
- Moved mid-year: Kentucky → OhioTwo part-year returns
Other Kentucky pairs
Questions people actually ask
I live in Kentucky and work in Ohio. Which state takes the tax out of my paycheck?
Ohio withholding is switched off by agreement. Kentucky and Ohio hold a reciprocal arrangement covering wages, so as a Kentucky resident you file Form IT 4NR with your Ohio employer, have Kentucky tax withheld instead, and file the Kentucky resident return alone.
Which state should my employer be withholding for?
Kentucky. Your employer should withhold Kentucky tax rather than Ohio tax on these wages, but only once you have given payroll Form IT 4NR — the exemption is not automatic and it does not apply retroactively. If a Ohio line is showing on your pay stub, raise it with payroll now rather than at filing time.
What if Ohio tax was already withheld from my pay?
File Form IT 4NR with your employer to stop it going forward, then recover what was already taken by filing a Ohio nonresident return for that year and claiming a refund of the full amount. Kentucky will still expect its own tax on the same wages, so do not treat the refund as a windfall.
How current is this?
The Kentucky and Ohio rules on this page were last checked against Kentucky Department of Revenue and Ohio Department of Taxation 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.
- Kentucky Department of Revenue — individual income taxaccessed 2026-08-07
- Ohio Department of Taxation — individual income taxaccessed 2026-08-07
- Ohio — Form IT 4NRaccessed 2026-08-07