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
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
Tax burdens rose across the country as pandemic-era economic changes caused taxable income, activities, and property values to rise faster than net national product. Tax burdens in 2020, 2021, and 2022 are all higher than in any other year since 1978.
24 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?
8 min read
Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
7 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).
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If the policy goal of taxing cigarettes is to encourage cessation, vapor taxation must be considered a part of that policy design.
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6 min read
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However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
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Compare the latest 2023 sales tax rates as of July 1st. Sales tax rate differentials can induce consumers to shop across borders or buy products online.
8 min read
At least 32 notable tax policy changes recently took effect across 18 states, including alterations to income taxes, payroll taxes, sales and use taxes, property taxes, and excise taxes. See if your state tax code changed.
16 min read
Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined.
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Of all alcoholic beverages subject to taxation, stiff drinks—and all distilled spirits—face the stiffest tax rates. Like many excise taxes, the treatment of distilled spirits varies widely across the states.
4 min read
States are in a better position to attract business investment when they maintain competitive real property tax rates and avoid harmful taxes on tangible personal property, intangible property, wealth, and asset transfers.
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