Kentucky Payroll Tax And Labor Laws

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Did you know that out-of-state businesses can deduct Kentucky tax from salaries made to Kentucky residents working outside of the state?

Kentucky Wage and Hour Laws

Kentucky’s minimum wage legislation requires that employees be paid $7.25 per hour. The state minimum wage will increase by the same amount as the federal minimum wage.

Except for the following personnel, who are not covered:

• laborers in agriculture;
• workers of retail shops, hotels, motels, and restaurants with a five-year average annual sales of less than $95,000;
• persons employed by a third party or organization that offers ill, convalescing, or elderly people with in-home companionship services; and
• a few emergency personnel

Kentucky Payroll for Employers

Kentucky Unemployment:

Taxable Wage Base ($000s):                        11,100

New Employer Rate (% Taxable Wages)    2.625 or 8.925

Employers must withhold state income tax from employees’ paychecks and return the amounts withheld to the Kentucky Department of Revenue under Kentucky law.

Employers, particularly agricultural employers, who are obliged to withhold federal income taxes are also required to withhold Kentucky income taxes. Kentucky payroll tax rates that is needed to be deducted from pay paid to the corporation’s workers are held personally responsible for certain corporate officials and officers of limited liability corporations.

Residents of certain states who work in Kentucky are not subject to Kentucky income tax withholding if these jurisdictions provide an exemption from withholding to Kentucky residents who earn income in these states under reciprocal Kentucky payroll tax rate arrangements. Illinois, Indiana, Michigan, Ohio, West Virginia, and Wisconsin have all signed similar accords. Employees who live in Virginia but commute to work in Kentucky on a daily basis, or who live in Kentucky but work in Virginia on a daily basis, are not subject to Kentucky withholding. As state laws change and Kentucky payroll tax forms, reciprocal agreements may alter from year to year.

Kentucky Benefits

Kentucky Voting Rights:

Employer Right to Schedule Voting Hours         Yes

Pay Deduction for Voting Time Leave                 Time Off with Pay Limited to 4 Hours

Employees must be given up to four hours of paid time off to vote or request an absentee ballot. Employees who are chosen to serve as election officials must be given a full day to train or serve as election officers.

Employers can set the number of hours that voting leave can be taken.

Kentucky State Tax Resources