Live in Rhode Island, Work in Kentucky: Which State Taxes Your Paycheck?
Answer
You file twice: Kentucky first, then Rhode Island. There is no reciprocity agreement between these two states, so Kentucky taxes the income where it was earned and Rhode Island taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Last verified
Without an agreement between Rhode Island 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 Rhode Island return, so completing Rhode Island first means doing it twice.
A Rhode Island resident taxed by another state on the same income claims the credit for taxes paid to other states on Form RI-1040NR Schedule II. The credit is capped at the Rhode Island 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 Rhode Island.
- 2Resident return · Rhode IslandForm RI-1040NR Schedule II
File a Rhode Island resident return reporting all income, then claim the credit for tax paid to Kentucky. The credit is capped at what Rhode Island 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
| Rhode Island | Kentucky | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 7 (Form 42A809) |
| Convenience rule | No | No |
| Nonresident return | Form RI-1040NR | Form 740-NP |
| Credit for other-state tax | Form RI-1040NR Schedule II | Schedule ITC |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Rhode Island Division 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 Rhode Island 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: Rhode Island → KentuckyHome state only
- 1099 contractor: Rhode Island → KentuckyHome state, plus the client state if you work there
- Moved mid-year: Rhode Island → KentuckyTwo part-year returns
Other Rhode Island pairs
Questions people actually ask
I live in Rhode Island and work in Kentucky. Which state takes the tax out of my paycheck?
You file twice: Kentucky first, then Rhode Island. There is no reciprocity agreement between these two states, so Kentucky taxes the income where it was earned and Rhode Island taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Which state should my employer be withholding for?
Kentucky. The wages are sourced to Kentucky, so Kentucky withholding is correct and there is no Rhode Island 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. Rhode Island gives residents a credit for tax paid to Kentucky on the same income, claimed on Form RI-1040NR Schedule II. The credit is capped at the Rhode Island tax on that income, so if Kentucky taxes it more heavily the excess is not refunded by either state.
How current is this?
The Rhode Island and Kentucky rules on this page were last checked against Rhode Island Division 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.
- Rhode Island Division of Taxation — individual income taxaccessed 2026-08-07
- Kentucky Department of Revenue — individual income taxaccessed 2026-08-07