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Live in Kentucky, Work in Rhode Island: Which State Taxes Your Paycheck?

Both states — credit offsets the double taxRhode Island withholds

Answer

Both states tax the same wages, and a credit undoes the overlap. Rhode Island withholds as your work state and you file a Rhode Island nonresident return; Kentucky taxes residents on all income, so you also file at home and claim the credit for tax paid to Rhode Island. File Rhode Island first.

Last verified

Without an agreement between Kentucky and Rhode Island, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Rhode Island figure is an input to the Kentucky return, so completing Kentucky first means doing it twice.

A Kentucky resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule ITC. The credit is capped at the Kentucky tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.

What you file

  1. 1Nonresident return · Rhode IslandForm RI-1040NR

    File the Rhode Island nonresident return FIRST — you need the Rhode Island tax figure before you can complete Kentucky.

  2. 2Resident return · KentuckySchedule ITC

    File a Kentucky resident return reporting all income, then claim the credit for tax paid to Rhode Island. The credit is capped at what Kentucky would have charged on that same income, so if Rhode Island taxes it at a higher rate the difference is not refunded.

The two states, side by side

 KentuckyRhode Island
Taxes wagesYes — flatYes — graduated
Reciprocity partners7 (Form 42A809)None
Convenience ruleNoNo
Nonresident returnForm 740-NPForm RI-1040NR
Credit for other-state taxSchedule ITCForm RI-1040NR Schedule II
Nonresident safe harbourNone publishedNone published
Local income taxYesNo
Revenue departmentKentucky Department of RevenueRhode Island Division of Taxation
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Rhode Island and working in Kentucky gives:Both states — credit offsets the double tax.

Rhode Island to Kentucky →

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.

Other Kentucky pairs

Questions people actually ask

I live in Kentucky and work in Rhode Island. Which state takes the tax out of my paycheck?

Both states tax the same wages, and a credit undoes the overlap. Rhode Island withholds as your work state and you file a Rhode Island nonresident return; Kentucky taxes residents on all income, so you also file at home and claim the credit for tax paid to Rhode Island. File Rhode Island first.

Which state should my employer be withholding for?

Rhode Island. The wages are sourced to Rhode Island, so Rhode Island withholding is correct and there is no Kentucky withholding to set up.

Will I end up paying tax twice on the same income?

Not twice over, but you will pay the higher of the two rates. Kentucky gives residents a credit for tax paid to Rhode Island on the same income, claimed on Schedule ITC. The credit is capped at the Kentucky tax on that income, so if Rhode Island taxes it more heavily the excess is not refunded by either state.

How current is this?

The Kentucky and Rhode Island rules on this page were last checked against Kentucky Department of Revenue and Rhode Island Division 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.