Kentucky payroll taxes

Kentucky state income tax: Flat-rate system; employers withhold using your K-4 and the latest Kentucky Department of Revenue tables.
Local occupational taxes: Many cities/counties impose wage-based occupational license taxes withheld through payroll (see table below).
FICA (federal): Social Security and Medicare—see the Kentucky FICA section below.
Federal income tax (FIT): Withheld using IRS rules from your Form W-4.
State Unemployment Insurance (SUI): Employer-paid only; employees do not pay Kentucky UI from wages.
Pre-tax deductions: 401(k), HSA/FSA, Section 125 premiums can reduce taxable wages where eligible.
Post-tax deductions: Roth 401(k), garnishments, union dues, and other after-tax items reduce net pay after taxes.

How Your Kentucky Paycheck Works

Start with gross pay (salary per period or hourly rate × hours; include overtime where due).
Subtract pre-tax items (traditional 401(k), HSA/FSA, cafeteria plans) to get taxable wages.
Calculate FICA (Social Security up to the federal wage base; Medicare on all wages; Additional Medicare for high earners).
Calculate federal withholding using IRS methods and your W-4.
Calculate Kentucky state withholding using K-4 details and state tables.
Apply any local occupational tax based on where you work (and sometimes reside) in Kentucky.
Employer separately pays Kentucky SUI—this does not reduce your net pay.
Subtract post-tax deductions to reach net pay.

Kentucky unemployment insurance (SUI) — 10-year snapshot

Employees do not pay Kentucky UI from wages. Employers contribute on a taxable wage base at experience or new-employer rates. Confirm exact figures on your annual rate notice.

Year	Employee UI Rate	Employee Pays?	Employer Taxable Wage Base (note)	New Employer Rate (typical)	Experienced Rate Range (approx.)
2016	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2017	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2018	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2019	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2020	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2021	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2022	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2023	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2024	0%	No	Set annually by KY	~2.7%	~0.3%–10%+
2025	0%	No	Set annually by KY	~2.7%	~0.3%–10%+

Kentucky salary threshold

Kentucky follows federal FLSA white-collar rules. To classify executive/administrative/professional employees as exempt, they must meet the current federal salary threshold and the duties tests. If either test is not met, overtime is generally owed after 40 hours in a workweek.

Median Household Income — Kentucky (10 years, current dollars)

Illustrative nominal values showing recent trend; consult the latest ACS release for official figures.

Year	Median Household Income
2015	$46,700
2016	$48,000
2017	$50,200
2018	$52,200
2019	$54,800
2020	$54,100
2021	$57,300
2022	$60,900
2023	$64,100
2024	$65,700

Kentucky Federal Insurance Contributions Act (FICA)

Social Security: 6.2% employee + 6.2% employer, up to the federal wage base.
Medicare: 1.45% employee + 1.45% employer on all wages.
Additional Medicare: 0.9% employee-only on wages above $200,000 (employer remains 1.45%).

Number of cities that have local income taxes

Many Kentucky jurisdictions levy occupational license taxes on wages. Rates, bases, and resident/non-resident rules vary by city/county ordinance. Your employer typically withholds the work-location tax (and in some places, a residence tax). Always verify your specific city/county requirements each year to avoid under- or over-withholding.

Local occupational tax table (selected examples)

Jurisdiction	Employee Wage Tax	Notes
Louisville Metro (Jefferson Co.)	Varies by ordinance (percentage of wages)	Includes metro/school/transit components; employer withholds
Lexington-Fayette	Varies by ordinance (percentage of wages)	Urban County occupational license tax
Bowling Green (Warren Co.)	Varies by ordinance (percentage of wages)	City and county components possible
Covington (Kenton Co.)	Varies by ordinance (percentage of wages)	Resident/non-resident rules may differ
Owensboro (Daviess Co.)	Varies by ordinance (percentage of wages)	Confirm current combined rate

Kentucky Wage and Hour Laws: Overtime, Pay Frequency

Overtime: Kentucky follows FLSA—most non-exempt employees earn 1.5× after 40 hours/week (no statewide daily overtime rule).
Minimum wage: Kentucky adopts the federal baseline of $7.25/hour for most covered employers.
Pay frequency: Employees must be paid on regular, established paydays—commonly at least semimonthly or biweekly; final-pay timelines apply at separation.
Breaks/meals: Follow federal and state rules; some occupations and minors have additional requirements.

Additional Kentucky forms

K-4 — Kentucky Employee’s Withholding Certificate.
KY withholding returns — Periodic employer deposits and annual reconciliation/W-2 filing.
UI Employer Registration & Rate Notice — Kentucky Office of Unemployment Insurance account setup and annual rate assignment.
Local occupational license registrations — City/county accounts for withholding local taxes.
Required posters — Wage payment, unemployment, safety, and federal notices.

FAQs — Kentucky Salary Paycheck Calculator

How do I use a Kentucky Salary Paycheck Calculator to estimate net pay?

Enter your gross pay and pay frequency, W-4 and K-4 elections, any pre-tax (401(k), HSA/FSA) and post-tax deductions, and your work/resident locality. The calculator applies FICA, federal and Kentucky state withholding, and applicable local occupational taxes to estimate your per-paycheck and annual take-home.

Does Kentucky have local income taxes that come out of paychecks?

Yes—many cities and counties impose occupational license taxes on wages. Employers usually withhold the correct amount based on your work location and sometimes residence. Check both jurisdictions to ensure accurate withholding.

Do Kentucky employees pay unemployment tax from wages?

No. Kentucky UI is an employer-paid contribution. Employees do not have a state UI line on their pay stubs.

What salary makes me exempt from overtime in Kentucky?

Kentucky relies on the federal FLSA tests. Exempt status requires meeting the current federal salary threshold and the duties tests. If those aren’t met, overtime is due after 40 hours in a week.

Which form adjusts my Kentucky state withholding?

Use the K-4 to set or change your Kentucky withholding elections (e.g., filing status, exemptions, extra withholding). Update it after life events or changes in jobs.

How are bonuses and commissions taxed on a Kentucky paycheck?

They’re subject to federal withholding (IRS supplemental methods), FICA, Kentucky state withholding, and any applicable local occupational taxes. Employer UI remains an employer expense and doesn’t reduce your net pay.

Why is my coworker’s take-home different even with the same salary?

Differences in W-4/K-4 elections, local occupational tax jurisdictions, pre-tax benefits, Roth vs. traditional contributions, supplemental pay methods, and garnishments can materially change taxable wages and withholding.

How often must I be paid in Kentucky?

Employers must establish regular, posted paydays (biweekly or semimonthly are common) and pay on time. Final-pay timing depends on the separation scenario and policy.

Does the calculator handle local occupational taxes automatically?

Yes—enter your work (and, if needed, residence) locality so the correct occupational tax rules can be applied alongside state and federal withholding.

Where can I find official Kentucky payroll guidance and forms?

See the Kentucky Department of Revenue for K-4 and withholding instructions, the Kentucky Office of Unemployment Insurance for employer UI accounts and rates, and your city/county website for current occupational tax ordinances.

Kentucky Salary Paycheck Calculator