REMOTE EMPLOYEES

Hiring a remote employee in Kentucky

Your company is in another state and one employee lives and works from home in Kentucky. Which state's taxes apply, unemployment, paid leave and Kentucky's employer rules, each with its official source.

Facts from the official sources listed at the end of this page; the oldest was read from an archived copy dated July 9, 2026. For employers. General information, not legal or tax advice: confirm a rule with the agency before you rely on it.

Kentucky at a glance

Income tax: Kentucky withholding
Reciprocity: With Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin
Unemployment: $12,000 wage base, 2.7% new employer
Paid leave: None
New hire report: Within 20 days

Which state's taxes apply

Work state: Kentucky taxes wages for work done in Kentucky. Withhold Kentucky income tax on the employee's wages.Source: Kentucky Department of Revenue, Withholding Kentucky Income Tax: Instructions for Employers, 42A003, revised March 2026 (PDF) (opens in a new tab), checked October 5, 2026
Withholding form: Form K-4Source: Kentucky Department of Revenue, Form K-4 Kentucky's Withholding Certificate 2026, 42A804(12-2025) (PDF) (opens in a new tab), checked October 5, 2026
Reciprocity: If your office is in Illinois: Kentucky residents working there are withheld for Kentucky, with IL-W-5-NR. If your office is in Indiana: Kentucky residents working there are withheld for Kentucky, with WH-47. If your office is in Michigan: Kentucky residents working there are withheld for Kentucky, with MI-W4 (line 8b). If your office is in Ohio: Kentucky residents working there are withheld for Kentucky, with IT 4 (Section III). If your office is in Virginia: only Kentucky residents who commute there daily are withheld for Kentucky, with Form VA-4, line 3 (condition c); an employee who works from home and comes in on some days is withheld for Virginia on those days. If your office is in West Virginia: Kentucky residents working there are withheld for Kentucky, with WV/IT-104NR. If your office is in Wisconsin: Kentucky residents working there are withheld for Kentucky, with Form W-220.Source: IDOR, Form IL-W-5-NR, Employee's Statement of Nonresidence in Illinois (PDF); Publication 130 (February 2026) (opens in a new tab), checked October 5, 2026; Indiana DOR, Income Tax Information Bulletin #28 (December 2024, PDF) (opens in a new tab), checked October 5, 2026; Michigan Treasury, Form 446, 2026 Michigan Income Tax Withholding Guide (Rev. 02-26, PDF) (opens in a new tab), checked October 5, 2026; Ohio Department of Taxation, Form IT 4, Employee's Withholding Exemption Certificate (Rev. 01/24, PDF) (opens in a new tab), checked October 5, 2026; Virginia Tax, Form VA-4, Employee's Virginia Income Tax Withholding Exemption Certificate (Rev. 04/26, PDF) (opens in a new tab), checked October 5, 2026; West Virginia Tax Division, WV IT-104 Employee's Withholding Exemption Certificate and WV/IT-104NR Certificate of Nonresidence (Rev. 03/2023, PDF) (opens in a new tab), checked October 5, 2026; Wisconsin DOR, Form W-220, Nonresident Employee's Withholding Reciprocity Declaration (R. 7-22, PDF) (opens in a new tab), checked October 5, 2026
Convenience rules: If your company is in Delaware, New York or Pennsylvania, the employee is assigned to an office there and works there on some days, that state taxes the days worked from home in Kentucky for the employee's convenience.Source: Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026; NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026; PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
Office days in your company's state: That state's day limit, if it has one, decides whether it withholds on those days: see its page, or the helper below.
An employee from another state working in Kentucky: Kentucky sets no day count before a nonresident's wages for work there are withheld.Source: Kentucky Department of Revenue, 42A003 (3-26), Withholding Kentucky Income Tax Instructions for Employers (PDF) (opens in a new tab), checked October 6, 2026

Where to withhold: two states

Pick your company's state, the state where the employee lives and works from home, and the days a year the employee works at your office. The answer reads each state's rules from the data on these pages.

Your company is in

Employee lives and works from home in

Days a year at your office

Assigned to an employer office in New YorkMatters only in the states with a convenience rule (Connecticut, Delaware, New Jersey, New York and Pennsylvania), and only with office days there.

Income tax withholding

Kentucky: all wages.

No New York withholding: the employee does no work in New York.

Unemployment

Kentucky: the employee works from home there, so the work is localized in Kentucky.

Simplified: resident credits, dollar tests, local taxes and a move during the year are not worked out here. Each state's rule and its source are on its page.

Unemployment

The employee works from home in Kentucky, so the work is localized in Kentucky: pay Kentucky unemployment tax, not your company state's.

Agency: Kentucky Office of Unemployment Insurance (Education and Labor Cabinet)Source: Kentucky Office of Unemployment Insurance, Unemployment Insurance Self-Service (KUIP) (opens in a new tab), checked October 5, 2026
Wage base: $12,000 Fixed by lawSource: Kentucky Office of Unemployment Insurance, Taxable Wage Base and Surcharge Information (updated 2026-08-03) (opens in a new tab), checked October 5, 2026
New employer rate: 2.7% 2.7% until the employer has three years of experience (it can go higher on the reserve ratio, never lower); new contract-construction employers pay the highest rate on the schedule in effect Surcharges included Construction 9%Source: Kentucky Office of Unemployment Insurance, Employer Guide to Kentucky Unemployment Insurance, approved 07-31-2026 (PDF) (opens in a new tab), checked October 5, 2026

Open the account: Kentucky payroll tax registration

Paid leave

Kentucky has no paid leave program funded through payroll.

Kentucky employer rules

Employment law applies where the employee works, so these follow the employee into Kentucky.

Final pay: Fired: Next regular payday or 14 days after separation, whichever is later Quit: Next regular payday or 14 days after separation, whichever is laterSource: Kentucky Education and Labor Cabinet, Division of Wages and Hours, Wages and Hours FAQ (opens in a new tab), read from an archived copy dated October 4, 2026 (opens in a new tab)
Pay frequency: At least semimonthly, paying all wages earned to a day no more than 18 days before payday. Bona fide executive, administrative, supervisory and professional staff, outside salespeople and outside collectors are excepted.Source: Kentucky Revised Statutes 337.020, Time of payment of wages (PDF) (opens in a new tab), read from an archived copy dated July 9, 2026 (opens in a new tab)
Pay notice: No written pay-rate notice at hire. A pay-rate change must be told to the employee before any hours are worked at the new rate (no retroactive change). Employers of 10 or more who make deductions give a paper or electronic statement of each deduction with every payment (KRS 337.070).Source: Kentucky Revised Statutes 337.070, Employer to furnish employee with statement of wage deductions (Kentucky Legislature) (opens in a new tab), checked October 5, 2026
New hire reporting: Within 20 days of the date of hire.Source: Kentucky Revised Statutes 405.435, Information from employers and labor organizations upon hiring of Kentucky residents (Kentucky Legislature; effective July 1, 2025) (opens in a new tab), checked October 5, 2026
E-Verify: No state E-Verify mandate for private employersSource: Kentucky Revised Statutes Chapter 336, Labor and Employment, table of sections (Kentucky Legislature) (opens in a new tab), checked October 5, 2026
Sick leave: No state sick leave law.Source: Kentucky Revised Statutes 65.016, Prohibition against requiring any employer to pay employee a certain wage or fringe benefit (Kentucky Legislature) (opens in a new tab), checked October 5, 2026

When the employee moves

Re-check the work state and the registrations before the next payroll: a move changes which state's withholding, unemployment, paid leave and employer rules apply.

Registering your business in Kentucky, and whether one remote employee creates tax nexus for your company, are separate questions this page does not cover.

More on Kentucky

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Sources

The agency page or document behind each fact, as checked.

General information, not legal or tax advice. Rules change; confirm current requirements with the relevant agency or your advisor. You remain responsible for your employment taxes and for each state's rules.

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Hiring a remote employee in Kentucky

Kentucky at a glance

Which state's taxes apply

Where to withhold: two states

Income tax withholding

Unemployment

Unemployment

Paid leave

Kentucky employer rules

When the employee moves

More on Kentucky

Payroll for employees who work from home in another state

Remote employees in other states

Sources

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