Live in Maine, Work in Kentucky: Which State Taxes Your Paycheck?
Answer
Both states tax the same wages, and a credit undoes the overlap. Kentucky withholds as your work state and you file a Kentucky nonresident return; Maine taxes residents on all income, so you also file at home and claim the credit for tax paid to Kentucky. File Kentucky first.
Last verified
Without an agreement between Maine and Kentucky, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Kentucky figure is an input to the Maine return, so completing Maine first means doing it twice.
A Maine resident taxed by another state on the same income claims the credit for taxes paid to other states on Form 1040ME Schedule A. The credit is capped at the Maine tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
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
- 1Nonresident return · KentuckyForm 740-NP
File the Kentucky nonresident return FIRST — you need the Kentucky tax figure before you can complete Maine.
- 2Resident return · MaineForm 1040ME Schedule A
File a Maine resident return reporting all income, then claim the credit for tax paid to Kentucky. The credit is capped at what Maine would have charged on that same income, so if Kentucky taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Maine | Kentucky | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 7 (Form 42A809) |
| Convenience rule | No | No |
| Nonresident return | Form 1040ME with Schedule NR | Form 740-NP |
| Credit for other-state tax | Form 1040ME Schedule A | Schedule ITC |
| Nonresident safe harbour | 12 days or a dollar floor | None published |
| Local income tax | No | Yes |
| Revenue department | Maine Revenue Services | Kentucky Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Kentucky and working in Maine gives:Both states — credit offsets the double tax.
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: Maine → KentuckyHome state only
- 1099 contractor: Maine → KentuckyHome state, plus the client state if you work there
- Moved mid-year: Maine → KentuckyTwo part-year returns
Other Maine pairs
Questions people actually ask
I live in Maine and work in Kentucky. Which state takes the tax out of my paycheck?
Both states tax the same wages, and a credit undoes the overlap. Kentucky withholds as your work state and you file a Kentucky nonresident return; Maine taxes residents on all income, so you also file at home and claim the credit for tax paid to Kentucky. File Kentucky first.
Which state should my employer be withholding for?
Kentucky. The wages are sourced to Kentucky, so Kentucky withholding is correct and there is no Maine 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. Maine gives residents a credit for tax paid to Kentucky on the same income, claimed on Form 1040ME Schedule A. The credit is capped at the Maine tax on that income, so if Kentucky taxes it more heavily the excess is not refunded by either state.
How current is this?
The Maine and Kentucky rules on this page were last checked against Maine Revenue Services 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.
- Maine Revenue Services — individual income taxaccessed 2026-08-07
- Kentucky Department of Revenue — individual income taxaccessed 2026-08-07