Kentucky State Taxes
Quick Tax Facts
- Income Tax: 4.5%
- State Sales Tax: 6%
- Median Property Tax: $843
The Bluegrass State (Kentucky) is known for its beautiful landscapes, abundant outdoor activities, and horses. But the home of the Kentucky Derby may not be everyone’s top pick. Although the state has a flat income tax rate, it can translate into higher taxes for many residents. Thankfully, the state does have a fairly modest sales tax rate and its average property tax amount is one of the lowest in the country.
Kentucky Income Tax
Kentucky has a flat income tax rate. As a result of House Bill 8, which was passed during the 2022 legislative session, the individual income tax rate will drop by half a point (.50%) annually if certain conditions are met until it is eliminated. For the 2023 tax year, the income tax rate is 4.5%
Who Must File?
If you are a full-year Kentucky resident, your filing requirement depends on your family size, modified gross income, Kentucky adjusted gross income, and any self-employment income you may have earned. If your modified gross income exceeds the amount in Chart A below and your Kentucky adjusted gross income exceeds the amount in Chart B, you must file a state income tax return (Form 740).
|Chart A: Modified Gross Income & Family Size|
|If your family size is:||Modified gross income is greater than:|
|Four or more||and||$27,750|
|Chart B: Kentucky Adjusted Gross Income|
|If your filing status is:||Kentucky adjusted gross income is greater than:|
|Single (under 65)||and||$2,770|
|Single (65+ or blind)||and||$3,570|
|Single (65+ and blind)||and||$4,370|
|Married (both under 65)||and||$2,770|
|Married (one 65+)||and||$3,570|
|Married (both 65+)||and||$4,370|
Kentucky adjusted gross income is your federal adjusted gross income plus any additions or subtractions from Kentucky Schedule M, Modifications to Federal Adjusted Gross Income.
If you are self-employed, you must file a state income tax return if you have gross receipts above the income for your family in Chart A, regardless of how much you have in Kentucky adjusted gross income (Chart B).
It’s important to note that there are no special provisions for a dependent whose income exceeds the filing threshold. Minors meeting these requirements are also required to file a state return.
Non-residents and part-year residents must file an income tax return (Form 740-NP, Kentucky Nonresident and Part-Year Resident Individual Income Tax Return) if any gross income from Kentucky sources or other sources exceeds the modified gross income limits for their family size. The thresholds are the same as those for full-year resident taxpayers.
Kentucky has reciprocal agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin. Any non-resident who lives in one of these states but earns wages and salaries in Kentucky is exempt from filing an income tax return. Instead, they should file Form 740-NP-R to receive a refund of any Kentucky income tax withheld.
Kentucky Sales Tax
Kansas has a state sales tax rate of 6%. Kentucky does not levy local or county sales taxes.
Kentucky Property Taxes
In Kentucky, property taxes are levied at both the state and local levels. State law requires the state real property tax rate to be reduced anytime the statewide total of real property assessments exceeds the previous year’s assessment by more than 4%. The rate is set annually by July 1. Over the years the rate has dropped from 31.5 cents per $100 of assessed valuation to 12.2 cents.
Each county has a general rate that is set by the fiscal court and a school district rate set by the local school board.
The median property tax in Kansas is approximately $843 annually. Oldham County has the highest property tax at an average of $2,244. The lowest amount is $293 in Wolfe County.
Kentucky Tax Holidays
At this time, Kentucky does not have any tax holidays scheduled.
Kentucky Tax Resources
If you need assistance preparing your Kentucky state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.
You can also visit the Kentucky Department of Revenue website for additional resources.