Kentucky / Michigan 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 |
|---|---|---|---|---|
| Michigan | Kentucky | No state form (employer-developed form or letter; MI-W4 line 8b) | $2,507 | $2,937 |
| Kentucky | Michigan | 42A809 | $2,937 | $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 Michigan
- RAB 2017-13: "Reciprocal agreements do not apply to independent contractors, local taxes, or income other than compensation." Michigan city income taxes therefore survive reciprocity.
- 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
- Michigan: Michigan Dept. of Treasury — Revenue Administrative Bulletin 2017-13 — https://www.michigan.gov/taxes/rep-legal/rab/2017-revenue-administrative-bulletins/revenue-administrative-bulletin-2017-13
- 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 Kentucky / Michigan numbers
Opens on work in Michigan, live in Kentucky. Change the salary, either state, or filing status below.
Kentucky / Michigan: common questions
Does Michigan tax Kentucky residents who work there?
No. Michigan 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 No state form (employer-developed form or letter; MI-W4 line 8b) with your Michigan employer to stop the withholding. Source: Michigan Dept. of Treasury — Revenue Administrative Bulletin 2017-13.
Does Kentucky tax Michigan residents who work there?
No. Kentucky does not withhold its state income tax from a Michigan resident's wages under the reciprocity relationship in effect for 2026 — that income is taxed by Michigan 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. Michigan: RAB 2017-13: "Reciprocal agreements do not apply to independent contractors, local taxes, or income other than compensation." Michigan city income taxes therefore survive reciprocity. 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.
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 employee compensation (salaries, wages, commissions) only — expressly NOT independent contractors. 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 →