How does Kentucky’s tax code compare? Kentucky has a flat 4.00 percent individual income tax rate. There are also jurisdictions that collect local income taxes. Kentucky has a 5.0 percent corporate income tax rate. Kentucky also has a 6.00 percent state sales tax rate and does not have local sales taxes. Kentucky has a 0.74 percent effective property tax rate on owner-occupied housing value.
Kentucky has an inheritance tax. Kentucky has a 30 cents per gallon gas tax rate and a $1.10 cigarette excise tax rate. The State of Kentucky collects $5,945 in state and local tax collections per capita. Kentucky has $12,020 in state and local debt per capita and has a 50 percent funded ratio of public pension plans. Kentucky’s tax system ranks 22nd overall on the 2025 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Kentucky is no exception. The first step towards understanding Kentucky’s tax code is knowing the basics. How does Kentucky collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
115 min read
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Forty-four states levy a corporate income tax, with top rates ranging from a 2.25 percent flat rate in North Carolina to a 11.5 percent top marginal rate in New Jersey.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 24 percent of combined state and local tax collections.
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From 2021-2024, within the span of 3.5 years, more states enacted laws converting graduated-rate individual income tax structures into single-rate income tax structures than did so in the whole 108-year history of state income taxation up until that point.
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Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.
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39 min read