Key Tax Facts: Kentucky
- Flat 4.0% rate as of 2024, down from 4.5%
- $31,110 retirement income exclusion (pension, IRA, 401k)
- Social Security benefits are exempt
- Local occupational taxes apply in many cities and counties
Estimate Your 2026 Federal and Kentucky State Income Tax
Kentucky State Income Tax Overview
Kentucky has a flat state income tax rate of 4.0% for 2024, reduced from 4.5% in 2023 as part of a legislative plan to gradually lower the rate over time. Kentucky does not use graduated brackets, making calculations straightforward. The state provides a standard deduction of $3,270 for single filers and $6,540 for married couples filing jointly for tax year 2025. Kentucky exempts up to $31,110 of pension and retirement income from state income tax for qualifying residents, and Social Security benefits are fully exempt. The state also imposes a limited liability entity tax on businesses and a local occupational tax in many counties and cities.
What Is Different About Kentucky's Income Tax
Deductions and exemptions
Kentucky's standard deduction is $3,270 for 2025 and is indexed annually. Filers may itemize using a limited set of federal deductions: mortgage interest, charitable contributions, medical expenses, and certain others, but not state or local taxes. There are no personal exemptions.
Credits worth knowing
Credits are limited to a family size credit that phases out at low income, a personal credit of $40 for filers 65 and older or blind, a child and dependent care credit of 20% of the federal credit, and a credit for taxes paid to other states. Many cities and counties levy occupational license taxes on wages that are collected through payroll rather than on the state return.
Retirement, capital gains, and other income
Social Security is fully exempt, and Kentucky excludes the first $31,110 of pension, 401(k), and IRA income per person, one of the largest such exclusions in the country. Military retirement pay falls within the same exclusion. Capital gains are taxed at the 4.0% flat rate.
Rules summarized from the Kentucky Department of Revenue guidance for tax year 2026. Amounts that index annually are described in general terms; confirm the current figure on the official form instructions.
Kentucky Income Tax Rate (2026) projected
Kentucky uses a flat income tax rate -- the same percentage applies to all taxable income regardless of how much you earn.
Source: Kentucky Department of Revenue
What a Kentucky Resident Actually Pays: A Worked Example
| Taxable Income | $65,000.00 |
| Kentucky Flat Rate | 4% |
| Estimated State Tax | $2600.00 |
| Effective Rate | 4% |
Where Kentucky Stands Among the 50 States
Kentucky's top rate of 4% ranks #33 of the 41 states that tax wages -- among the ten lowest of the states that levy the tax at all. The median top rate across those 41 states is 5.2%, so Kentucky is below the middle of the pack. It is one of 14 states with a single flat rate, so every taxable dollar is taxed at 4% and the effective rate never climbs with income the way it does in the 27 graduated-rate states.
On sales tax the picture is similar: Kentucky's combined state and average local rate of 6% ranks #38 of 50, against a national median of 7.00%.
Kentucky State Tax at Five Income Levels (2026, single filer)
| Taxable income | Kentucky tax | Effective rate | Marginal rate |
|---|---|---|---|
| $40,000 | $1,600 | 4.00% | 4% |
| $65,000 | $2,600 | 4.00% | 4% |
| $100,000 | $4,000 | 4.00% | 4% |
| $150,000 | $6,000 | 4.00% | 4% |
| $250,000 | $10,000 | 4.00% | 4% |
Brackets applied directly to the taxable-income figure shown, before Kentucky-specific deductions, exemptions, or credits. Federal tax is separate and comes on top of every row.
Kentucky vs. Its Neighbors on $75,000 of Taxable Income
A Kentucky resident with $75,000 of taxable income pays about $3,000 in state income tax. Of Kentucky's 7 neighboring states, 4 would tax that income less and 3 would tax it more.
| State | Structure | Tax on $75,000 | Top rate | Sales tax |
|---|---|---|---|---|
| Kentucky (you) | Flat | $3,000 | 4% | 6% |
| Tennessee | No income tax | $0 | None | 9.55% |
| Ohio | Rate to 3.5% | $1,346 | 3.5% | 7.22% |
| Indiana | Rate to 3% | $2,250 | 3% | 7% |
| West Virginia | Rate to 4.82% | $2,777 | 4.82% | 6.52% |
| Missouri | Rate to 4.7% | $3,349 | 4.7% | 8.28% |
| Illinois | Rate to 4.95% | $3,713 | 4.95% | 8.82% |
| Virginia | Rate to 5.75% | $4,055 | 5.75% | 5.75% |
Frequently Asked Questions -- Kentucky Income Tax
Does Kentucky have a state income tax?
Yes. Kentucky imposes a state income tax with a flat rate of 4%. This is separate from your federal income tax obligation.
What is the Kentucky income tax rate for 2026?
Kentucky uses a flat income tax rate of 4% on all taxable income, regardless of income level or filing status.
Do I have to file a Kentucky state tax return?
Most full-year Kentucky residents with income above the state filing threshold must file a state return. Check the Kentucky Department of Revenue for current thresholds and requirements.
How accurate is this estimate?
The federal figure uses the official IRS 2026 brackets and standard deduction. The Kentucky figure applies the 2026 single-filer rate schedule to the same taxable income; it does not model Kentucky-specific deductions, exemptions, credits, or local income taxes, so treat it as a planning number and confirm with the Kentucky Department of Revenue or a tax professional before filing.
How does Kentucky compare with nearby states?
On $75,000 of taxable income, Kentucky collects about $3,000. Tennessee collects $0, Ohio collects $1,346, Indiana collects $2,250, West Virginia collects $2,777, Missouri collects $3,349, Illinois collects $3,713, Virginia collects $4,055. See the comparison table above.
Where does Kentucky rank on state income tax?
Kentucky's top rate of 4% ranks #33 of the 41 states with an income tax, against a median top rate of 5.2%. Its combined sales tax of 6% ranks #38 of 50.
Does this calculator include federal income tax?
Yes. It estimates your 2026 federal income tax using the official IRS 2026 brackets, then applies the Kentucky rate schedule to the same taxable income and shows both figures plus the combined total.
Where can I find official Kentucky tax forms?
Official forms, instructions, and filing guidance are available at the Kentucky Department of Revenue.
What is the sales tax rate in Kentucky?
Kentucky's combined state and average local sales tax rate is 6%. This is separate from income tax and applies to most retail purchases -- use our sales tax calculator to check a specific purchase.
When are Kentucky 2026 state taxes due?
2026 taxes are generally filed in 2027. The Kentucky filing deadline is April 15, 2027, the same as the federal deadline.
Understanding Your Kentucky Tax Estimate
Your results combine two separate bills: federal tax owed to the IRS, and Kentucky state tax owed to the Kentucky Department of Revenue. The state return is filed separately from your federal Form 1040, with a state filing deadline of April 15. For the mechanics of how bracket math actually works -- why your effective rate is almost always lower than your top bracket -- see our marginal vs. effective tax rate guide.
Lowering Your Kentucky Bill
Pre-tax retirement contributions reduce your federal and Kentucky taxable income in the same move -- see our 401(k) contribution limits and HSA limits guides for the current caps. Beyond that, Kentucky-specific credits and deductions that don't exist at the federal level are listed at the Kentucky Department of Revenue -- worth checking, since these are easy to miss if you only look at federal guidance.
Combined Sales + Income Tax Picture
Kentucky's combined state-plus-average-local sales tax rate is 6%. If you're self-employed, that's an added layer on top of income tax -- our self-employment tax calculator covers the SE-specific piece separately.
Disclaimer: Estimates for educational purposes only. State tax results are approximations based on published bracket data and do not account for all deductions, credits, exemptions, local taxes, or individual situations. Not tax, legal, or financial advice. Consult the Kentucky Department of Revenue or a qualified tax professional for guidance specific to your situation.