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This information was last verified on May 7, 2026. Tax laws may have changed since then.
Kentucky
Employee Obligations (Which Returns YOU Must File)
If you physically work in Kentucky, file a nonresident Kentucky return (tax rate: Flat 4.0% (2025), 3.5% (2026)). Then file your Iowa return and claim the IA 130 credit so you don't get taxed twice on the same income.
Employer Obligations (What Your Employer Must Withhold & Remit)
Register for withholding and unemployment from day 1. Must also register with local tax authorities. Unemployment applies to the first $11,400 of wages.
City & Local Income Taxes (Extra Filings Beyond the State Return)
87 counties and approximately 170 cities levy occupational taxes on nonresidents ranging from 0.5% to 2.5%. City and county taxes can stack. Louisville Metro charges 1.45% for nonresidents. Lexington-Fayette charges 2.25%. Combined state plus local total can exceed 6%. The M1CR credit does NOT cover these local taxes.
Related guides
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This is general information, not tax or legal advice. Laws change frequently. Always consult a licensed CPA or tax attorney for your specific situation. All information researched as of March 21, 2026.