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.
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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
States that tax GILTI increase filing complexity, drive up the cost of tax compliance, and introduce unnecessary economic uncertainty and legal risk. 21 states and DC continue to tax GILTI despite these challenges.
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Sports stadium subsidies are salient political gimmicks designed to appear as if politicians are providing tangible benefits to taxpayers. The empirical evidence shows repeatedly that stadium subsidies fail to generate new tax revenue and new jobs or attract new businesses.
6 min read
Raising the combined US corporate rate to the second highest in the OECD would encourage corporations to depart from the US, reducing economic output and worker wages across the income spectrum.
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Wireless taxes and fees set a new record high in 2024.
23 min read
Legal sports betting has grown rapidly since the Supreme Court granted states the ability to establish online sports betting markets in Murphy vs. NCAA in 2018.
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The latest IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state’s economic growth and governmental coffers.
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States would do better to broaden the sales tax base to include currently exempt classes of final consumption than to impose disproportionate taxes on prepared foods.
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While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts—especially as a large number of major cities have combined rates of 9 percent or more.
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Property taxes are the primary tool for financing local governments and generate a significant share of state and local revenues.
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Though gas taxes are intended to serve as user fees and pollution deterrents, they vary widely across states. How does your state’s burden compare?
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