Determination engine

Which state do you actually withhold in?

Reciprocity, convenience-of-the-employer, nonresident thresholds and unemployment localization, applied together to one employee's facts. Every answer cites the state source it came from.

Withhold Kentucky income tax.

Ohio and Kentucky have a reciprocal agreement, so the work state stands down once the exemption certificate is on file.

Income tax withheld to

Kentucky

Flat 3.5%

Employee certificate

IT 4NR

Employee's Statement of Residency in a Reciprocity State

Unemployment insurance

Ohio

Localized under factor 1: Localization.

Reciprocal agreement

Yes

Ohio exempts Kentucky residents.

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File IT 4NR with the employer

Reciprocity is not automatic. Until the employee files IT 4NR (Employee's Statement of Residency in a Reciprocity State) you are legally required to withhold Ohio tax. Keep the signed form on file; it is not sent to the state.

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Withhold Kentucky income tax instead

Under the agreement the employee is taxed only by their state of residence. You will need a Kentucky withholding account.

Reciprocity does not cover Ohio local taxes

Ohio has the most extensive local income tax system in the country -- roughly 600 municipalities and 180+ school districts levy income taxes, withheld by employers. Municipal tax is generally owed where the work is physically performed (subject to a 20-day occasional-entrant rule); school district tax is generally owed based on the employee's residence school district (Form IT 4 identifies it). CRITICAL: Ohio's state reciprocity agreements do NOT exempt a nonresident from Ohio MUNICIPAL income tax on work performed in an Ohio city.

Kentucky has local income taxes at the residence

Kentucky cities, counties and school districts levy occupational license (payroll) taxes ranging roughly 0.008%-2.5% (e.g., Louisville Metro, Lexington-Fayette). These are administered locally and are NOT covered by Kentucky's state reciprocity agreements -- reciprocal-state residents still owe local occupational tax on Kentucky work.

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Employer registrations you will need

Kentucky — Income tax withholding: Kentucky Department of Revenue
Ohio — Unemployment insurance: Ohio Department of Job and Family Services (ODJFS)

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Get the form

IT 4NR — Ohio (official state source)

Ohio profile Kentucky profile Full write-up for this pair

Change the inputs

Withholding determination

Answer six questions. The result is a shareable link, so you can paste it into a ticket or an email.

Employee lives inState of residence

Work is performed inWhere the employee physically sits

Employer is based inWhere the work is directed from

Days in the work stateThis calendar year, leave blank if unknown

Wages from work-state daysUS dollars, leave blank if unknown

Arrangement Works remotely rather than at an employer location Remote work is an employer necessity, not employee preference

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This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.