How to Complete the Kentucky State Withholding Form (K-4)

The Kentucky K-4 form, formally the Kentucky Withholding Exemption Certificate, is a short state form you give your employer for one of two reasons: to claim a full exemption from Kentucky income tax withholding, or to ask that extra money be withheld from each paycheck on top of the standard amount.¹ If neither applies to you, you don’t need to file one. Kentucky employers withhold at a flat 3.5 percent using a standard formula, and that default requires no paperwork from you.²

When You Actually Need to File a K-4

The K-4 has exactly two uses.¹ The first is to claim a total exemption from Kentucky income tax withholding under one of four specific categories. The second is to request an additional dollar amount be withheld each pay period, usually to cover tax on side income the state isn’t otherwise seeing.

If you only earn wages from a Kentucky employer and don’t fit an exemption category, skip the form. Your employer will subtract the $3,360 standard deduction from your annualized wages and withhold 3.5 percent of what’s left, spread across your pay periods.³ There are no allowances or dependents to declare. For most wage earners, the default lands close to the correct annual tax.

The Four Exemption Boxes

The form lists four checkboxes. Check only the one that applies.⁴

No Expected Tax Liability

You qualify if you had no Kentucky income tax liability last year (a full refund of everything withheld) and expect the same result this year. The form uses income thresholds tied to the federal poverty level. For 2024 those figures were $15,060 for a family of one, $20,440 for a family of two, $25,820 for a family of three, and $31,200 for a family of four or more, measured against modified gross income (federal AGI plus interest from other states’ municipal bonds and any pension income from a qualifying lump-sum distribution).¹ The 2026 form updates these numbers to current guidelines.

This is the only exemption that expires on its own. A no-liability exemption claimed for 2025 expires February 15, 2026, and you have to file a fresh K-4 each year to keep it.¹

Reciprocal State Resident

Kentucky has reciprocal tax agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin. Residents of those states pay income tax to their home state instead of Kentucky. Two of them carry conditions: Virginia residents must commute daily to their Kentucky workplace, and Ohio residents cannot be 20-percent-or-greater equity investors in an S corporation.⁵

Checking this box stops Kentucky withholding, but it does not start withholding for your home state. That’s your responsibility, either through estimated payments or by working with payroll. Your employer may also ask you to complete Form 42A809, the Certificate of Nonresidence, as separate documentation. If you move to Kentucky or to a non-reciprocal state, tell your employer within ten days so Kentucky withholding can resume.⁵

Fort Campbell Exemption

Fort Campbell sits on the Kentucky-Tennessee border. Federal law (Public Law 105-261) exempts wages earned at the installation from Kentucky income tax for workers who aren’t Kentucky residents. You qualify only if you are not domiciled in Kentucky and do not maintain a place of residence in the state while spending more than 183 days here during the tax year. Check box 2 and write in your actual state of residence. If you later move to Kentucky, you have ten days to revoke the exemption.¹

Nonresident Military Spouse

Under the Servicemembers Civil Relief Act and the Military Spouses Residency Relief Act, a military spouse’s Kentucky income isn’t taxable when all three conditions hold: the servicemember is stationed in Kentucky under military orders, the spouse is in Kentucky solely to be with the servicemember, and both maintain legal residence in another state.⁶ Check box 3, and keep documentation of the servicemember’s duty orders and your shared state of legal residence in case anyone asks.

Asking for Extra Withholding

The bottom of the K-4 has a line for a flat dollar amount you want withheld from each paycheck on top of the standard formula.⁴ The point is to cover tax on income no employer is withholding on: freelance earnings, rental income, investment gains. Instead of making quarterly estimated payments to the state, you route the money through payroll.

To size the amount, estimate the extra non-wage income you expect for the year, multiply by 3.5 percent, and divide by the number of pay periods you have left. Overshoot and you get a refund. Undershoot and you may owe interest, which Kentucky charges at 9 percent on underpaid tax for the 2026 calendar year.⁷

Filling Out and Submitting the Form

The K-4 is one page. The fields are:

Your full legal name and current home address. The address matters for residency verification, especially with the reciprocal-state and Fort Campbell exemptions.
Your Social Security number, which links withheld amounts to your tax account.
Exemption boxes 1 through 4. Check only the one that applies, or leave all blank if none do.
The additional withholding line. Enter a dollar amount per pay period, or leave blank.
Your signature and the date. Without both, the form is not valid.

Hand the signed form to payroll or human resources. It stays in your employer’s files; it doesn’t get sent to the state.¹ Most employers apply the change within one to two pay cycles. Check your next pay stub to confirm.

Blank copies are available as a PDF on the Kentucky Department of Revenue website (revenue.ky.gov), and most payroll offices keep them on hand.

When to File a New K-4

You can submit an updated K-4 any time your situation changes. Common triggers: you move from a reciprocal state to Kentucky and need to revoke the exemption; your income climbs above the poverty-level threshold, so the no-liability exemption no longer fits; or you pick up a side income source and want extra withholding.

The annual reminder: if you’re claiming the no-tax-liability exemption, it expires every February 15. A new form each year is the only way to keep it in place.¹

The Cost of Claiming an Exemption You Don’t Qualify For

Skipping the K-4 doesn’t create a tax problem on its own. Without one on file, your employer just uses the standard formula, and for most wage-only workers that comes close to the right amount.²

The real risk runs the other way. If you check an exemption box and it turns out you did owe Kentucky income tax, the full year’s bill lands at filing time, plus 9 percent interest and a late payment penalty of 2 percent of the tax due for each 30-day period, capped at 20 percent.⁷ Before checking a box, be sure you fit the category it describes.

1
Kentucky Department of Revenue. Form K-4 Withholding Certificate
2
Kentucky Department of Revenue. 2026 Kentucky Withholding Tax Formula
3
Kentucky Department of Revenue. Withholding Kentucky Income Tax
4
Kentucky Department of Revenue. K-4 Kentucky Withholding Exemption Certificate
5
Kentucky Department of Revenue. Certificate of Nonresidence
6
Kentucky Department of Revenue. Military Spouse Income Tax Relief
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Kentucky Department of Revenue. Penalties, Interest and Fees