The Kentucky Department of Revenue has issued a technical advice memorandum discussing the tax credits available for personal income taxes paid to another state. Generally, Kentucky residents and part-year residents are taxed on all sources of income. However, these taxpayers are eligible for a tax credit against the income earned outside Kentucky which is taxed by another jurisdiction; the credit may be secured by showing proof of payment of the tax due in the other jurisdiction.
In addition, Kentucky has a reciprocal agreement with several other states that eliminate the income covered by such agreements; however, since the income covered by such agreements are not taxed in the state, no credit is granted with respect to such income. Technical Advice Memorandum 18-03, Kentucky Department of Revenue, August 31, 2018.
