Kentucky Tax Guide
4%top marginal rate
Kentucky has a flat income tax of 4.0%. The state has been gradually reducing its income tax rate and may phase it out entirely if revenue targets are met. Property taxes are moderate and below the national average.
Kentucky Tax at a Glance
Income Tax
4%
Flat rate
Sales Tax
6%
State-level rate
Property Tax
0.86%
22% below the national average
Estate Tax
No
No state estate tax
How Kentucky Compares to the National Average
Notable Tax Facts
- Flat tax rate reduced from 5% to 4% — with a mechanism to phase it out entirely
- Has an inheritance tax (not estate tax) on non-family beneficiaries
- Property taxes are below the national average
- State is working toward potentially eliminating the income tax
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Kentucky Tax FAQ
What is Kentucky's income tax rate?
Kentucky has a flat income tax rate of 4.0%, reduced from 5% in recent years. Legislation includes a mechanism to further reduce or eliminate the income tax if revenue targets are met.
Does Kentucky have an inheritance tax?
Yes. Kentucky has an inheritance tax that applies to non-family beneficiaries. Class A beneficiaries (spouse, children, parents) are exempt. Tax rates range from 4% to 16%.
Is Kentucky trying to eliminate its income tax?
Yes. Kentucky passed legislation creating a framework to phase out the income tax through automatic rate reductions triggered when revenue targets are met.
Does Kentucky tax retirement income?
Kentucky exempts the first $31,110 of retirement income from state taxes. Social Security benefits are also fully exempt.
Compare With Other States
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Educational content, not tax advice. Tax rates are approximate and subject to change. Consult a qualified CPA or tax professional for advice specific to your situation. Data reflects widely-known public information as of early 2026.