Illinois / Kentucky tax reciprocity
Each pair below is taxed by the RESIDENCE state, not the work state — the work state agrees not to withhold. Figures are illustrative, on a $75,000 salary.
Who taxes you, and what to file
The certificate goes to your employer in the state you work in. Figures are state income tax on $75,000, single, no dependents.
| Work in | Live in | Certificate to file | Tax under reciprocity | If the work state taxed you |
|---|---|---|---|---|
| Illinois | Kentucky | IL-W-5-NR | $2,507 | $3,568 |
| Kentucky | Illinois | 42A809 | $3,568 | $2,507 |
The last column is hypothetical — what the work state would take with no agreement in place. It is not a second bill.
Does this cancel the local city or county tax?
Reciprocity is a state income tax concept. A local wage tax is a separate levy and can survive it.
- Working in Illinois
- Publication 130 does not address local wage taxes either way; Illinois has no state-wide local income tax for it to address.
- Working in Kentucky
- Kentucky local occupational license fees are not recoverable under reciprocity: Form 740-NP-R, the reciprocal-state refund return, instructs "Do not include local tax withheld." Kentucky publishes no explicit statement that local fees survive, so this rests on the refund return rather than a direct sentence.
Sources
- Illinois: Illinois Dept. of Revenue — Publication 130 (February 2026) — https://tax.illinois.gov/content/dam/soi/en/web/tax/research/publications/pubs/documents/pub-130.pdf
- Kentucky: Kentucky Dept. of Revenue — 103 KAR 17:140, Individual income tax — reciprocity — nonresidents — https://revenue.ky.gov/Dor%20Training%20Materials/103%20KAR%2017.140.%20Individual%20income%20tax%20-%20reciprocity%20-%20nonresidents.pdf
Run your own Illinois / Kentucky numbers
Opens on work in Illinois, live in Kentucky. Change the salary, either state, or filing status below.
Illinois / Kentucky: common questions
Does Illinois tax Kentucky residents who work there?
No. Illinois does not withhold its state income tax from a Kentucky resident's wages under the reciprocity relationship in effect for 2026 — that income is taxed by Kentucky instead. File IL-W-5-NR with your Illinois employer to stop the withholding. Source: Illinois Dept. of Revenue — Publication 130 (February 2026).
Does Kentucky tax Illinois residents who work there?
No. Kentucky does not withhold its state income tax from an Illinois resident's wages under the reciprocity relationship in effect for 2026 — that income is taxed by Illinois instead. File 42A809 with your Kentucky employer to stop the withholding. Source: Kentucky Dept. of Revenue — 103 KAR 17:140, Individual income tax — reciprocity — nonresidents.
Does reciprocity also cancel the local city or county tax?
Not necessarily — reciprocity is a state income tax concept, and a local wage tax is a separate levy that can survive it. Kentucky: Kentucky local occupational license fees are not recoverable under reciprocity: Form 740-NP-R, the reciprocal-state refund return, instructs "Do not include local tax withheld." Kentucky publishes no explicit statement that local fees survive, so this rests on the refund return rather than a direct sentence. Illinois: Publication 130 does not address local wage taxes either way; Illinois has no state-wide local income tax for it to address.
Does reciprocity cover self-employment or 1099 income?
No. Reciprocity covers employee compensation only, and the scope is set by each state's own materials rather than by a common rule — covers salaries, wages, tips and other employee compensation only. Self-employment income, rental income, gambling winnings and pass-through income are outside it, and may still require a nonresident return in the work state.
Other pairs involving these states
See all 32 state reciprocity pairs →