Kentucky has a flat 3.50 percent individual income tax rate. Kentucky has a flat 5.00 percent corporate income tax rate, a 6.00 percent state sales tax rate, and an average combined state and local sales tax rate of 6.00 percent. Kentucky has a 0.74 percent effective property tax rate on owner-occupied housing value. Kentucky has an inheritance tax. Kentucky’s gas tax is 26.4 cents per gallon, and its cigarette excise tax is $1.10 per pack of 20 cigarettes.
Kentucky raises tax revenue primarily through individual income taxes (32.3 percent of total state and local tax revenue), general sales taxes (23.1 percent), and property taxes (20.0 percent). Kentucky collects $5,444 in state and local tax collections per capita, carries $6,500 in state and local debt per capita, and has a 59 percent funded ratio of public pension plans. Kentucky’s tax system ranks 25th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Kentucky is no exception. Use the tabs below to compare Kentucky taxes with other states and to see how Kentucky raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: 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.
122 min read
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
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?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
9 min read
As home values have spiked, Florida and other states are weighing elimination of property taxes.
Does your state have a small business exemption for machinery and equipment?
4 min read
The trend of tax exemptions on tips, overtime, and bonuses may sound like a win for workers, but it is a shortsighted fix with long-term drawbacks.
11 min read
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
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?
12 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections).
9 min read
As a rule, an individual’s income can be taxed both by the state in which the taxpayer resides and by the state in which the taxpayer’s income is earned.
52 min read
Forty-four states levy corporate income tax. Top rates range 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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Americans were on the move in 2024, and many chose low-tax states over high-tax ones.
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Tax avoidance is a natural consequence of tax policy. Policymakers should consider the unintended consequences, both to public health and public coffers, of the excise taxes and regulatory regimes for cigarettes and other nicotine products.
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