Reciprocity state pair

Live in Kentucky, work in Indiana

Reciprocity agreement: Indiana doesn't tax your wages at the state level, so Kentucky taxes them. Indiana county income tax still applies (Form IT-40RNR). Give your employer Form WH-47 so it stops withholding Indiana state tax; it still withholds the county tax.

By Abu HasnatPage updated Nov 7, 2026Data: Kentucky and Indiana revenue departments (methodology)

Official tax guidance for both states

Check withholding, filing requirements and current forms with each state's tax agency.

Kentucky: Kentucky Department of Revenue (opens in new tab)
Indiana: Indiana Department of Revenue (opens in new tab)

Agency directory checked 2026-10-01 against the IRS state-government directory. This verifies the agency links, not an individual tax result. Use forms for the year you are filing.

Before you use this estimate

This model assumes a full-year resident of Kentucky, ordinary employee wages and all workdays physically in Indiana. Check exemption eligibility before treating a work-state amount of $0 as your own result. Withholding is a prepayment, not final tax liability. Other income, a move during the year, remote work and separate local taxes or credits can change the result.

Wage-exemption conditions: KY residents working in IN exempt from IN state tax on wages; file Form WH-47 (Certificate of Residence).

I live inI work inAnnual wages ($)Filing status

State income tax: $5,016 a year

Modeled annual state income tax for living in Kentucky and working in Indiana: about $5,016 on $100,000 of wages, $1,634 more than if you worked in Kentucky.

Limits of this estimate:

Indiana's county component uses an illustrative 1.65% average, not your actual January 1 principal-work-county rate; local credits are not calculated.

Conditions for this pair: KY residents working in IN exempt from IN state tax on wages; file Form WH-47 (Certificate of Residence).

Tax guide and official sources: live in Kentucky, work in Indiana

Official agency starting points: Kentucky tax agency (opens in new tab) · Indiana tax agency (opens in new tab). These directory links identify the selected states' agencies, not your filing obligations. Check their individual-tax guidance and forms for the year you are filing.

Tax to Indiana

$1,634

county tax only

Tax to Kentucky

$3,382

resident

Total state tax

$5,016

Typical state returns

This is the usual filing pattern, not a determination that you must file. Filing thresholds, age or dependent status, other income and withholding refunds can change which returns you need.

How this $100,000 estimate adds up

These steps follow the selected home, work state, salary and filing status. They reconcile the model's annual liability, not the amounts withheld from your paycheck.

Modeled state income tax for Kentucky residence and Indiana work
Step	Indiana work state	Kentucky home state
Tax before the modeled other-state credit	$1,634	$3,382
Modeled other-state credit subtracted	$0	$0
Tax after that credit	$1,634	$3,382

Total: $1,634 + $3,382 = $5,016 a year. Amounts are rounded for display. Work-state wage exemptions, when applicable, are already reflected in the first row; they are not an other-state credit.

No other-state credit is subtracted in this selected scenario. Included county components stay in these amounts; excluded local taxes and credits stay excluded. Federal income tax, payroll programs and refund eligibility are outside this reconciliation.

State tax at different salaries

Wages	To IN	To KY	Modeled total	If you worked in KY
$50,000	$809	$1,632	$2,441	$1,632
$75,000	$1,221	$2,507	$3,728	$2,507
$100,000	$1,634	$3,382	$5,016	$3,382
$150,000	$2,459	$5,132	$7,591	$5,132
$250,000	$4,109	$8,632	$12,741	$8,632

Single filer, all wages earned in Indiana, 2026 state tax rules, standard deductions. State income tax includes Indiana's average county income tax, which reciprocity does not cover (Form IT-40RNR; no Kentucky credit for it is assumed). Other local income taxes are not included.

What to do

Reciprocity: KY residents working in IN exempt from IN state tax on wages; file Form WH-47 (Certificate of Residence).
Your employer still withholds Indiana county tax. File Indiana Form IT-40RNR each year to settle it, along with your Kentucky resident return.
Keep a record of the days you work in each state, especially if you sometimes work from home.

Local income taxes

Indiana: Every Indiana county levies a local income tax. Indiana residents pay the rate of the county they live in on January 1. People who live in another state pay the tax of the Indiana county where they principally work on January 1, and that includes residents of reciprocity states (KY, MI, OH, PA, WI) who file Form WH-47: the reciprocity agreements cover only the state tax.
Kentucky: City/county occupational license taxes are levied by work location on residents and nonresidents alike (e.g., Louisville Metro ~2.2% combined, Lexington 2.25%), and are NOT covered by KY's state reciprocity agreements - OH/IN commuters into Louisville/Covington still pay them.

Special credit rules

IN: Indiana county tax is separate from state wage reciprocity and state-tax credits. Another state's state-tax credit does not offset Indiana county tax; any eligible credit for out-of-state local tax is separate and is not modeled.

Frequently asked questions

Do I pay Indiana income tax if I live in Kentucky?

If you qualify for wage reciprocity, no Indiana state income tax: under the reciprocity agreement Kentucky taxes your wages. Indiana county income tax still applies, though: about $1,634 on $100,000 at the average county rate, filed on Form IT-40RNR. KY residents working in IN exempt from IN state tax on wages; file Form WH-47 (Certificate of Residence).

Do I have to file taxes in both Kentucky and Indiana?

Usually yes: Indiana's reciprocal nonresident return (Form IT-40RNR) for the county tax, and your resident return in Kentucky for the state tax on your wages.

Will I be taxed twice?

Not at the state level: under the reciprocity agreement only Kentucky taxes your wages. Indiana county tax still applies, so your total is about $5,016 on $100,000 ($3,382 to Kentucky and $1,634 in Indiana county tax).

Rules reviewed 2026-09-24 from state revenue departments and the Tax Foundation. Estimates only; confirm with each state's revenue department.