Kentucky Law requires employers to withhold income tax for both residents and nonresidents employees (unless exempted by law). Employers must withhold the income tax of the employees receiving "wages" as defined in Section 3401(a) of the Internal Revenue Code.
Kentucky Withholding Tax Laws are located in Chapter 141 of the Kentucky Revised Statutes.
K-4E SPECIAL WITHHOLDING EXEMPTION CERTIFICATE
Employers: The Kentucky Department of Revenue strongly encourages all employers to utilize Form K-4E, Special Withholding Exemption Certificate when applicable.
This certificate should be completed by employees that anticipate no Kentucky Income Tax liability. If the employee is eligible to claim this exemption, the employer will not withhold Kentucky income tax from wages. This certificate may be used instead of Form K-4 by those employees qualified to claim the exemption.
To download the form along with instructions click on Current Year – Withholding Tax Forms