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Kentucky Payroll Taxes

• Kentucky Income Tax: Kentucky has a flat tax rate of 5%.
• Kentucky County Payroll Taxes: Kentucky has over 200 tax districts that charge a variable occupational tax. The occupational tax applies to employees who are residents of the district and/or perform their principal business functions in the district. Businesses located in the districts also pay the occupational tax.
• Kentucky Unemployment Insurance Tax: Kentucky employers pay an unemployment tax with rates ranging from 0% to 10.0% on a wage base of $10,800 per employee. New employers pay a flat rate of 2.7%. New construction industry employers pay 10%.

Yes. Unemployment Insurance Tax (UI) is a federally-mandated, state-run program that provides temporary payments to unemployed workers whose employment status is not a result of their own actions. Kentucky’s unemployment tax is managed through the Kentucky Office of Unemployment Insurance.

Any individual (resident or non-resident) or business entity (partnerships, C corporations, or S Corporations) who receive taxable compensation are required to file and pay the occupational tax to the Kentucky Department of Revenue. It is the responsibility of the employer to withhold the occupational tax from employee wages.

All Kentucky employers must register with the Kentucky Department of Revenue and the Kentucky Office of Unemployment Insurance.

You are not required to withhold Kentucky income tax from household employees’ wages. You may withhold Kentucky income tax if a household employee asks you to withhold and you agree to do so. If you decide to withhold, you must register with the Kentucky Department of Revenue. Employers of household employees must also pay state unemployment insurance tax.

Once CorpNet registers your business with the Kentucky Department of Revenue and the Kentucky Office of Unemployment Insurance, you will be issued a Kentucky Tax Withholding Account Number and Unemployment Tax Account Number. Your account numbers are required for all interactions to ensure your account is accurate. You must provide your account numbers when filing returns and making deposits in all electronic and paper filings.

• Name and Social Security number of all responsible parties
• Doing Business As (DBA), if applicable
• Physical business address and mailing address
• Business phone number
• Valid email address (contact person and business)
• Nine-digit federal Employer Identification Number (EIN)
• Industry description

An EIN is a Federal Tax Identification Number provided by the IRS. If you do not have an EIN already, CorpNet can obtain one for you via their FTIN service.

CorpNet works with the leading payroll processors and we can connect you with our trusted partners who will pay your employees, accrue the necessary taxes, and complete the necessary payments and documentation with state and federal authorities.