Kentucky Payroll Instructions

Kentucky has state income tax withholding. The standard deduction changed in 2023. (tax formulas changed in 19 of the past 33 years, mostly on even years)

Kentucky withholding formulas changed signficantly back in 2019. It's now a flat 5% tax rate for everyone, instead of a graduated tax table. Just one standard deduction. We still use a two-step table so it's easier to go back, in case the Kentucky legislature changes their mind. Both steps just calculate the flat tax amount.

HINT: TurtleSoft provides free annual updates for US federal and Kentucky tax withholding rates.

Kentucky State Withholding Instructions

To enter withholding information for an employee in your Goldenseal company file, follow these steps:

  1. Open the Payroll tab on the left, and choose Employees.
  2. Locate the employee's record.
  3. Click the Payroll Setup button.
  4. Enter the employee's marital status into the Marital Status field (see note below).
  5. Enter the number of federal dependents into the Federal Exemptions field.
  6. Enter the number of Kentucky dependents into the State Exemptions field.
  7. Enter a Kentucky Tax Package into the Tax Package field, based on the employee’s W4 form. Choose Old W4 for pre-2020 forms. Choose New W4 Step2- if they did not check the box in step 2 of the new form. Choose Step2+ if they did check it. HINT: If you don't see Kentucky packages in the list, you'll need to import 2022 tax info first.
  8. Click OK.

Kentucky State Unemployment Tax Instructions

Kentucky state unemployment tax is calculated on the first $10,800 of wages for each employee (2023 cutoff limit). It has jumped back and forth between that rate and a $11,100 cutoff. The cutoff is scheduled to gradually increase to $12,000.

For new companies, the starting rate is 2.7%. After the first year, the rate is different for each company, based on your past hiring experience.

To enter your Kentucky SUTA tax rate into Goldenseal payroll software, follow these steps:

  1. Choose Payroll Setup from the Costs menu, and choose Tax Items.
  2. You'll see a list of Tax Items. Open the Kentucky SUTA item HINT: If you don't see SUTA in the list, you'll need to import the Kentucky payroll info first.
  3. Enter your business SUTA percentage to the right of Calculation method.
  4. If the cutoff amount has changed, enter it into the dollar field to the right of First Adjustment.

Kentucky Marital Status

Enter one of the following values in the Marital Status field for each employee:

State Tax Contacts

Website

Official State Lawn Ornament

Horse droppings.