Living in Illinois, working in Kentucky
Reciprocal agreement · tax year 2026
You pay Illinois
$3,320
on a seventy-thousand wage
Kentucky would want
$2,332
The agreement is worth
$0
in money — the gain is one return, not two
File this
K-4
with your employer
What the agreement does for you
- Here is the honest answer for Illinois to Kentucky: this agreement saves you paperwork, not money. Illinois charges $3,320 on a seventy-thousand-dollar wage and Kentucky would charge $2,332 — less. You would have ended up paying the Illinois amount either way. What you gain is one tax return instead of two, and the right state taking the right amount out of every paycheck.
- The size of this depends on your pay. Illinois charges $2,083 on forty-five thousand dollars and $4,805 on a hundred thousand. Against that, Kentucky would have taken $3,382 at the higher figure. Check it against your own salary rather than the middle one.
- The agreement only works if you claim it. As a Illinois resident, give your employer the exemption certificate for Kentucky, and expect to sign a fresh one most years. Without it on file, Kentucky takes tax from every paycheck. Then you must file there to get it back.
- For this direction the agreement is procedural rather than pecuniary. Illinois's charge of $3,320 at seventy thousand dollars exceeds Kentucky's $2,332, so the resident-credit mechanism would have produced the same total liability without any agreement at all. ⭐ The benefit is real but administrative: a single return rather than a resident-plus-nonresident pair, correct withholding through the year instead of a refund claim against the work state, and no cash-flow cost from over-withholding.
- Liability under each schedule diverges with income: $2,083 and $4,805 in Illinois at forty-five and one hundred thousand dollars respectively, against $3,382 in Kentucky at the upper point. The relevant figure for any individual is therefore the one at their own wage — the mid-ladder comparison is illustrative of direction, not of magnitude.
- Reciprocity operates by employee election rather than automatically. The exemption certificate must be lodged with the employer and is generally renewable each year; absent it, Kentucky withholding continues and a nonresident return becomes necessary to recover it. ⚠️ Employers do not apply the agreement on the basis of a home address alone, so a commuter who never files the certificate obtains none of the benefit while remaining fully eligible for it.
What lands in your account
A $75,000 salary
Filing as
Paid
$2,232per paycheck
| Take-home, year | $58,025 |
|---|---|
| Tax, year | $16,975 |
| Share of pay taxed | 22.63% |
This is an average rate across all your pay — not the rate on your next dollar.
Illinois against Kentucky
A $75,000 salary
Compare with
+$6,614a year in Kentucky, once local prices are leveled
| Measure | Illinois | Kentucky |
|---|---|---|
| Take-home pay | $58,025 | $59,085 |
| Worth after local prices | $58,697 | $65,311 |
| Share of pay taxed | 22.63% | 21.22% |
| State sales tax | 6.25% | 6% |
| Groceries exempt here | Yes | Yes |
| Clothing exempt at $100 | No | No |
| Property tax rate | 2.01% | 0.75% |
| Price level | 98.9 | 90.5 |
| Housing prices | 92.4 | 62.9 |
| Fuel tax | 49.6¢ | 25¢ |
| Tobacco tax | $2.98 | $1.10 |
City income tax excluded. Sales-tax row: state-only. Exemptions: Illinois, Statewide average; Kentucky, Statewide average. Clothing: one $100 item; higher prices can change tax.
What you would need there
A $75,000 salary
Moving to
$66,108in Kentucky, for the same life
| To match take-home only | $73,414 |
|---|---|
| You could take a cut of | −$8,892 |
| Prices in Kentucky | 90 vs 99 |
State taxes and state price levels only. No city tax, and no housing market.
What each state would charge, across the ladder
Reference wages for a single filer, not a claim about anyone's salary. The last column is the difference the agreement actually removes — which is the gap between the two states, not Kentucky's whole charge.
| Wage | Illinois charges | Kentucky would charge | Agreement is worth |
|---|---|---|---|
| $45,000 | $2,083 | $1,457 | $0 |
| $70,000 | $3,320 | $2,332 | $0 |
| $100,000 | $4,805 | $3,382 | $0 |
What this page cannot tell you
- This covers wages from a job. It does not cover self-employment, rent or investment income — those follow the ordinary rules for Kentucky.
- ⚠️ And it is a deal between two states. City and county taxes are not part of it, and several of these states have them.
- Every agreement in this dataset applies to wages and salaries only. Business, rental, gain and investment income sourced to Kentucky remains taxable there under ordinary nonresident rules, and a commuter with such income may still owe a Kentucky return notwithstanding the agreement.
- ⚠️ Reciprocity binds the state layer only and commonly does NOT extend to municipal or county income taxes — Pennsylvania's local earned income tax is the standard example, remaining payable at the place of employment despite the state-level agreement. Local liabilities are excluded from every figure on this page.