-
Overall Rank
26
Down 1 place since 2026 -
27
Down 7 places since 2026 -
17
Up 8 places since 2026 -
19
No change since 2026 -
26
Up 3 places since 2026 -
Unemployment Insurance Tax Rank
34
Down 2 places since 2026
Kentucky ranks 26th overall on the 2027 State Tax Competitiveness Index.
Score 5.20 / 10
About Kentucky's Tax Code
Kentucky’s tax competitiveness has improved substantially in recent years due to several rounds of reforms that broadened the sales tax base to additional categories of mostly final personal consumption while moving to a single-rate individual income tax at a substantially lower rate. However, many other areas of the Commonwealth’s tax code are riddled with antiquated and complex provisions that remain ripe for reform.
Specifically, Kentucky is one of the few states that levy income-based taxes on individuals and businesses not just at the state level, but also at the county and municipal levels in the form of occupational license taxes and net profit taxes. In addition to individual and corporate income taxes, Kentucky levies a limited liability entity tax (LLET), which is a gross receipts-based alternative minimum tax on C corporations and limited liability pass-through businesses owed even when businesses do not turn a profit. Kentucky is further hindered by its lack of bonus depreciation allowance for corporate machinery and equipment investments. While Kentucky’s Section 179 small business expensing allowance is broadly available because the Commonwealth does not conform to the federal phaseout threshold, Kentucky’s expensing limit of $100,000 is much lower than the $2.56 million expensing limit offered in most states.
Kentucky is a notable outlier in applying its tangible personal property taxes to business inventory, a highly distortionary practice that has been abandoned in most states. Furthermore, Kentucky levies an inheritance tax that kicks in at a low level, affecting beneficiaries across the income spectrum, not just the affluent. Additionally, Kentucky’s UI tax ranking is hindered by high maximum rates, a surtax, and a three-year experience rating waiting period.
Component Scores
#26 overall · 5.20 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #27 | 5.23 / 10 | |
| Individual Income Taxes | #17 | 5.54 / 10 | |
| Sales Taxes | #19 | 5.07 / 10 | |
| Property Taxes | #26 | 5.06 / 10 | |
| Unemployment Insurance Taxes | #34 | 4.70 / 10 |
Ranking Changes, 2020–2027
#26 in 2027 · down 8 places from 2020Kentucky ranked 18th in 2020 and ranks 26th in 2027, a decline of 8 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 18 (5.22) | 17 (5.46) | 25 (5.24) | 13 (5.38) | 20 (5.31) | 40 (4.40) |
| 2021 | 20 (5.20) | 17 (5.45) | 27 (5.14) | 13 (5.38) | 21 (5.27) | 37 (4.51) |
| 2022 | 20 (5.23) | 18 (5.48) | 26 (5.18) | 12 (5.37) | 21 (5.25) | 34 (4.59) |
| 2023 | 20 (5.20) | 18 (5.45) | 28 (5.15) | 13 (5.32) | 18 (5.30) | 38 (4.53) |
| 2024 | 24 (5.16) | 17 (5.46) | 24 (5.31) | 21 (4.87) | 22 (5.23) | 38 (4.63) |
| 2025 | 25 (5.15) | 18 (5.44) | 21 (5.35) | 21 (4.87) | 26 (5.06) | 33 (4.70) |
| 2026 | 25 (5.15) | 20 (5.39) | 25 (5.30) | 19 (5.04) | 29 (5.01) | 32 (4.72) |
| 2027 | 26 (5.20) | 27 (5.23) | 17 (5.54) | 19 (5.07) | 26 (5.06) | 34 (4.70) |
Kentucky Compared across the States
#26 overallEach row places the states on a 0 to 10 score scale for one measure. Kentucky is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#26 5.20
Corporate Taxes
#27 5.23
Individual Income Taxes
#17 5.54
Sales Taxes
#19 5.07
Property Taxes
#26 5.06
Unemployment Insurance Taxes
#34 4.70
- Kentucky
- Other states, by rank (1st to 50th)
- 50-state median
Kentucky and Its Neighbors
#26 overallKentucky borders 7 states and ranks 26th overall; 3 of them rank higher and 4 rank lower.
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Tennessee #8 Score 5.99 18 places better -
Missouri #9 Score 5.66 17 places better -
Indiana #14 Score 5.51 12 places better -
Kentucky #26 Score 5.20 This state -
West Virginia #29 Score 5.09 3 places behind -
Virginia #31 Score 5.02 5 places behind -
Ohio #36 Score 4.85 10 places behind -
Illinois #38 Score 4.68 12 places behind
What Each Component Includes
The five components of the Index, what each one covers, and where Kentucky lands. Open any component for the full breakdown.
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Corporate Taxes
Rank #27Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for Kentucky → -
Individual Income Taxes
Rank #17Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for Kentucky → -
Sales Taxes
Rank #19Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for Kentucky → -
Property Taxes
Rank #26Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for Kentucky → -
Unemployment Insurance Taxes
Rank #34Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for Kentucky →
Tax Data Explorer
Every policy variable behind Kentucky's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
153 data points · Shaded values differ from Kentucky
Corporate Taxes: Corporate Income Tax Rates
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Bracket 1 | 5.0% > $0 | 9.5% > $0 (differs) | 4.9% > $0 (differs) | 4.0% > $0 (differs) | None (differs) | 6.5% > $0 (differs) | 6.0% > $0 (differs) | 6.5% > $0 (differs) |
| Gross Receipts Tax | No | No | No | No | Yes (differs) | Yes (differs) | No | No |
| Gross Receipts Tax Minimum Rate | n.a. | n.a. | n.a. | n.a. | 0.26% (differs) | 0.02% (differs) | n.a. | n.a. |
| Gross Receipts Tax Maximum Rate | n.a. | n.a. | n.a. | n.a. | 0.26% (differs) | 0.1875% (differs) | n.a. | n.a. |
| Gross Receipts Tax Rate Used in the Index | n.a. | n.a. | n.a. | n.a. | 0.26% (differs) | 0.15% (differs) | n.a. | n.a. |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Job Credits | Yes | Yes | Yes | Yes | Yes | Yes | No (differs) | Yes |
| Research and Development Credits | Yes | Yes | Yes | Yes | Yes | No (differs) | Yes | Yes |
| Investment Credits | Yes | Yes | Yes | Yes | Yes | Yes | No (differs) | Yes |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. | n.a. | No (differs) | No (differs) | n.a. | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. | n.a. | No (differs) | No (differs) | n.a. | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Conforms to Federal NOL Treatment | Yes | No (differs) | No (differs) | No (differs) | n.a. (differs) | No (differs) | Yes | Yes |
| Carryback (Years) | Conforms to federal treatment | 0 (differs) | 0 (differs) | 2 (differs) | n.a. (differs) | 0 (differs) | Conforms to federal treatment | Conforms to federal treatment |
| Carryback Cap | Conforms to federal treatment | $0 (differs) | $0 (differs) | Unlimited (differs) | n.a. (differs) | $0 (differs) | Conforms to federal treatment | Conforms to federal treatment |
| Carryforward (Years) | Conforms to federal treatment | 20 (differs) | 20 (differs) | 20 (differs) | n.a. (differs) | 15 (differs) | Conforms to federal treatment | Conforms to federal treatment |
| Carryforward Cap | Conforms to federal treatment | $500,000 (differs) | Unlimited (differs) | Unlimited (differs) | n.a. (differs) | Unlimited (differs) | Conforms to federal treatment | Conforms to federal treatment |
Corporate Taxes: Treatment of Capital Investment
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Section 168(k) Expensing | 0% | 0% | 0% | 100% (differs) | 100% (differs) | 20% (differs) | 0% | 100% (differs) |
| Conforms to Section 163(j) Limitation | Yes | Yes | No (differs) | No (differs) | No (differs) | No (differs) | Yes | Yes |
| GILTI Inclusion | Decouples | 50% Inclusion (differs) | Decouples | Decouples | n.a. (differs) | 5% Inclusion (differs) | Decouples | 50% Inclusion (differs) |
| Section 174 Expensing | No | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) | No | Yes (differs) |
| Section 168(n) Expensing | No | No | No | Yes (differs) | Yes (differs) | No | No | Yes (differs) |
Corporate Taxes: Other Corporate Base Variables
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Conformity Status | Static (current) | Rolling (differs) | Static (current) | Rolling (differs) | Static (current) | Rolling (differs) | Static (current) | Static (current) |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Yes | Yes | Yes | Yes | Partial (differs) | Yes | Yes |
| Throwback Rule | No | Yes (differs) | No | No | No | No | No | No |
| Foreign Tax Deductibility | No | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) | No | No |
| Corporate AMT | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) |
| Brackets Indexed for Inflation | Flat CIT | Flat CIT | Flat CIT | Flat CIT | GRT (differs) | Flat CIT | Flat CIT | Flat CIT |
Individual Income Taxes: Individual Income Tax Rates
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Bracket 1 | 3.5% > $0 | 4.95% > $0 (differs) | 2.95% > $0 (differs) | 2.0% > $1,348 (differs) | 2.75% > $26,050 (differs) | No Income Tax (differs) | 2.0% > $0 (differs) | 2.11% > $0 (differs) |
| Bracket 2 | n.a. | n.a. | n.a. | 2.5% > $2,696 (differs) | n.a. | n.a. | 3.0% > $3,000 (differs) | 2.81% > $10,000 (differs) |
| Bracket 3 | n.a. | n.a. | n.a. | 3.0% > $4,044 (differs) | n.a. | n.a. | 5.0% > $5,000 (differs) | 3.16% > $25,000 (differs) |
| Bracket 4 | n.a. | n.a. | n.a. | 3.5% > $5,392 (differs) | n.a. | n.a. | 5.75% > $17,000 (differs) | 4.22% > $40,000 (differs) |
| Bracket 5 | n.a. | n.a. | n.a. | 4.0% > $6,740 (differs) | n.a. | n.a. | n.a. | 4.58% > $60,000 (differs) |
| Bracket 6 | n.a. | n.a. | n.a. | 4.5% > $8,088 (differs) | n.a. | n.a. | n.a. | n.a. |
| Bracket 7 | n.a. | n.a. | n.a. | 4.7% > $9,436 (differs) | n.a. | n.a. | n.a. | n.a. |
| Standard Deduction (Single Filer) | $3,360 | n.a. (differs) | n.a. (differs) | $16,100 (differs) | n.a. (differs) | n.a. (differs) | $8,750 (differs) | n.a. (differs) |
| Personal Exemption (Single Filer) | n.a. | $2,925 (differs) | $1,000 (differs) | n.a. | $2,400 (differs) | n.a. | $930 (differs) | $2,000 (differs) |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | n.a. | $2,925 (differs) | $1,000 (differs) | n.a. | $2,400 (differs) | n.a. | $930 (differs) | $2,000 (differs) |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | 2.25% | None (differs) | 1.76% (differs) | 1.00% (differs) | 2.50% (differs) | None (differs) | None (differs) | 0.42% (differs) |
| Surtaxes on Wage Income | n.a. | 1.5% (differs) | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Marriage Penalty | No | No | No | No | Yes (differs) | n.a. (differs) | Yes (differs) | Yes (differs) |
| Married Couples Can File Separately on One Return | Yes | No (differs) | No (differs) | Yes | No (differs) | n.a. (differs) | No (differs) | Yes |
| Convenience Rule | No | No | No | No | No | No | No | No |
| Interest Taxed | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes | Yes |
| Dividends Taxed | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes | Yes |
| Capital Gains Taxed | Yes | Yes | Yes | No (differs) | Yes | n.a. (differs) | Yes | Yes |
| Combined Capital Gains Tax Rate | 3.5% | 4.95% (differs) | 4.755% (differs) | 0% (differs) | 3.125% (differs) | n.a. (differs) | 5.75% (differs) | 4.58% (differs) |
| Tax Brackets Indexed for Inflation | Yes | Yes | Yes | Yes | No (differs) | n.a. (differs) | No (differs) | No (differs) |
| Standard Deduction Indexed for Inflation | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | No (differs) | Yes |
| Personal Exemption Indexed for Inflation | Yes | Yes | No (differs) | Yes | No (differs) | n.a. (differs) | No (differs) | No (differs) |
| Progressivity Ratio | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | n.a. (differs) | 1.00 | 1.00 |
Individual Income Taxes: Other Individual Base Variables
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes | Yes |
| Conformity Status | Static (current) | Rolling (differs) | Static (current) | Rolling (differs) | Static (current) | n.a. (differs) | Static (current) | Static (current) |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes | Yes |
| AMT Levied | No | No | No | No | No | n.a. (differs) | No | No |
| Recognition of S Corporation Status | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Section 179 Expensing Limit | $100,000 | $2,560,000 (differs) | $25,000 (differs) | $2,560,000 (differs) | $446,667 (differs) | $2,560,000 (differs) | $1,250,000 (differs) | $2,560,000 (differs) |
| Tips | Taxable | Taxable | Exempt (differs) | Taxable | Taxable | n.a. (differs) | Taxable | Taxable |
| Overtime | Taxable | Taxable | Exempt (differs) | Taxable | Taxable | n.a. (differs) | Taxable | Taxable |
| Filing and Withholding Threshold Index | 0 | 10 (differs) | 10 (differs) | 0.339 (differs) | 0.169 (differs) | 10 (differs) | 0 | 5 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Income Recapture | No | No | No | No | No | n.a. (differs) | No | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| State Sales Tax Rate | 6.00% | 6.25% (differs) | 7.00% (differs) | 4.23% (differs) | 5.75% (differs) | 7.00% (differs) | 5.30% (differs) | 6.00% |
| Average Local Sales Tax Rate | 0.00% | 2.73% (differs) | 0.00% | 4.22% (differs) | 1.54% (differs) | 2.61% (differs) | 0.47% (differs) | 0.60% (differs) |
| Maximum Local Sales Tax Rate | None | 4.75% (differs) | None | 6.25% (differs) | 2.25% (differs) | 2.75% (differs) | 2.70% (differs) | 1.40% (differs) |
| Gasoline Tax (Cents per Gallon) | 26.40 | 70.40 (differs) | 63.10 (differs) | 29.99 (differs) | 38.50 (differs) | 27.40 (differs) | 42.40 (differs) | 35.70 (differs) |
| Diesel Tax (Cents per Gallon) | 23.4 | 77.9 (differs) | 64 (differs) | 29.99 (differs) | 47 (differs) | 28.4 (differs) | 43.5 (differs) | 35.7 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $1.103 | $2.98 (differs) | $2.995 (differs) | $0.17 (differs) | $1.60 (differs) | $0.62 (differs) | $0.60 (differs) | $1.20 (differs) |
| Beer Tax (Dollars per Gallon) | $0.8906 | $0.231 (differs) | $0.115 (differs) | $0.06 (differs) | $0.18 (differs) | $1.2868 (differs) | $0.2565 (differs) | $0.1774 (differs) |
| Spirits Tax (Dollars per Gallon) | $9.56 | $8.55 (differs) | $2.68 (differs) | $2.00 (differs) | $12.33 (differs) | $4.46 (differs) | $23.47 (differs) | $8.98 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 83.3333% | 117.75% (differs) | 78.50% (differs) | n.a. (differs) | 10.00% (differs) | 26.1667% (differs) | 11.00% (differs) | 7.50% (differs) |
Sales Taxes: Business-to-Business Exemptions
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable |
| Farm Equipment | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Office Equipment | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Manufacturing Machinery | Partial | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| Manufacturing Raw Materials | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Business Fuel and Utilities | Exempt | Exempt | Exempt | Exempt | Exempt | Partial (differs) | Exempt | Taxable (differs) |
| Business Leases and Rentals | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Information Services | Exempt | Exempt | Exempt | Exempt | Taxable (differs) | Exempt | Exempt | Taxable (differs) |
| Software as a Service (SaaS) | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Taxable | Taxable | Exempt (differs) | Taxable |
| Platform as a Service (PaaS) | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Taxable | Exempt (differs) | Exempt (differs) | Taxable |
| Digital B2B Products | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Taxable | Taxable | Exempt (differs) | Taxable |
| Payroll Services | Exempt | Exempt | Exempt | Exempt | Taxable (differs) | Exempt | Exempt | Exempt |
| Data Center Purchases | Exempt | Taxable (differs) | Exempt | Exempt | Taxable (differs) | Exempt | Exempt | Exempt |
| Digital Advertising Tax | No | No | No | No | No | No | No | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Groceries | Exempt | Alternate Rate (differs) | Exempt | Alternate Rate (differs) | Exempt | Alternate Rate (differs) | Local Tax Only (differs) | Exempt |
| Clothing | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Prescription Medication | Exempt | Alternate Rate (differs) | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Nonprescription Medication | Taxable | Alternate Rate (differs) | Taxable | Taxable | Taxable | Taxable | Exempt (differs) | Taxable |
| Gasoline | Exempt | Taxable (differs) | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Landscaping | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Taxable | Exempt (differs) | Exempt (differs) | Taxable |
| Repair Services | Exempt | Exempt | Exempt | Exempt | Taxable (differs) | Taxable (differs) | Exempt | Taxable (differs) |
| Real Estate Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Parking | Taxable | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Taxable | Exempt (differs) | Taxable |
| Dry Cleaning | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Taxable | Taxable | Exempt (differs) | Taxable |
| Fitness Services | Taxable | Exempt (differs) | Exempt (differs) | Taxable | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| Barber Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Veterinary Services | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| E-Books | Taxable | Exempt (differs) | Taxable | Exempt (differs) | Taxable | Taxable | Exempt (differs) | Exempt (differs) |
| Streaming Video | Exempt | Exempt | Taxable (differs) | Exempt | Taxable (differs) | Taxable (differs) | Exempt | Exempt |
| Medical Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Legal Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Financial Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Accounting Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Sales Tax Holiday | No | Yes (differs) | No | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) |
Sales Taxes: Sales Tax Structure
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Unified Tax Administration | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Safe Harbor for Remote Sellers | Sales or Transactions Threshold | Gross Sales Threshold (differs) | Gross Sales Threshold (differs) | Gross Sales Threshold (differs) | Sales or Transactions Threshold | Gross Sales Threshold (differs) | Sales or Transactions Threshold | Sales or Transactions Threshold |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Property Tax Collections per Capita | $1,118 | $3,016 (differs) | $1,487 (differs) | $1,567 (differs) | $1,688 (differs) | $921 (differs) | $2,296 (differs) | $1,258 (differs) |
| Property Tax as a Percentage of Personal Income | 1.92% | 4.04% (differs) | 2.32% (differs) | 2.41% (differs) | 2.61% (differs) | 1.39% (differs) | 2.97% (differs) | 2.27% (differs) |
| Assessment Limit | No | No | No | No | No | No | No | No |
| Levy Limit | No | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) | No | No | Yes (differs) |
| Capital Stock Tax Rate | None | 0.1% (differs) | None | None | None | 0.25% (differs) | None | None |
| Capital Stock Tax Maximum Payment | n.a. | $2,000,000 (differs) | n.a. | n.a. | n.a. | Unlimited (differs) | n.a. | n.a. |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. | Pay both (differs) | n.a. | n.a. | n.a. | Pay both (differs) | n.a. | n.a. |
Property Taxes: Property Tax Bases
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Tangible Personal Property Tax | Yes | No (differs) | Yes | Yes | No (differs) | Yes | Yes | Yes |
| Tangible Personal Property De Minimis Exemption | $1,000 | n.a. (differs) | $2,000,000 (differs) | None (differs) | n.a. (differs) | None (differs) | None (differs) | None (differs) |
| Intangible Property Tax | Yes | No (differs) | No (differs) | No (differs) | No (differs) | Yes | No (differs) | No (differs) |
| Inventory Tax | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | Partial (differs) | Yes |
| Real Estate Transfer Tax | Yes | Yes | No (differs) | No (differs) | Yes | Yes | Yes | Yes |
| Split Roll | No | Yes (differs) | No | Yes (differs) | No | Yes (differs) | No | Yes (differs) |
| Split Roll Ratio | 1.00 | 2.50 (differs) | 1.00 | 1.68 (differs) | 1.00 | 1.60 (differs) | 1.00 | 4.00 (differs) |
| Estate Tax | No | 16% (differs) | No | No | No | No | No | No |
| Inheritance Tax | 16% | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) |
| Gift Tax | No | No | No | No | No | No | No | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Minimum Rate | 0.30% | 0.75% (differs) | 0.50% (differs) | 0.00% (differs) | 0.55% (differs) | 0.01% (differs) | 0.10% (differs) | 1.50% (differs) |
| Maximum Rate | 9.00% | 7.05% (differs) | 7.40% (differs) | 6.00% (differs) | 10.25% (differs) | 10.00% (differs) | 6.20% (differs) | 8.50% (differs) |
| Taxable Wage Base | $12,000 | $14,250 (differs) | $9,500 (differs) | $9,000 (differs) | $9,000 (differs) | $7,000 (differs) | $8,000 (differs) | $9,500 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.00% | 0.20% (differs) | 0.00% | 0.00% | 0.00% | 0.01% (differs) | 0.00% | 0.00% |
| Most Favorable Schedule: Maximum Rate | 9.00% | 6.40% (differs) | 5.40% (differs) | 5.40% (differs) | 6.30% (differs) | 10.00% (differs) | 5.40% (differs) | 7.50% (differs) |
| Least Favorable Schedule: Minimum Rate | 1.00% | 0.20% (differs) | 0.75% (differs) | 0.00% (differs) | 0.30% (differs) | 0.50% (differs) | 0.10% (differs) | 1.50% (differs) |
| Least Favorable Schedule: Maximum Rate | 10.00% | 6.40% (differs) | 10.20% (differs) | 7.80% (differs) | 6.70% (differs) | 10.00% | 6.20% (differs) | 7.50% (differs) |
| Employer Contributions as a Share of Total Wages | 0.37% | 0.57% (differs) | 0.25% (differs) | 0.21% (differs) | 0.42% (differs) | 0.15% (differs) | 0.08% (differs) | 0.51% (differs) |
| Employer Contributions as a Share of Taxable Wages | 1.62% | 2.80% (differs) | 1.32% (differs) | 1.08% (differs) | 2.44% (differs) | 0.96% (differs) | 0.56% (differs) | 2.40% (differs) |
| Trust Fund Solvency Ratio | 0.7 | 0.23 (differs) | 0.77 (differs) | 0.7 | 0.43 (differs) | 0.77 (differs) | 0.71 (differs) | 0.81 (differs) |
| New Employer Rate | 2.70% | 2.70% | 2.50% (differs) | 2.70% | 2.70% | 2.70% | 2.73% (differs) | 2.70% |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Experience Formula Based On | Reserve Ratio | Benefits Ratio (differs) | Reserve Ratio | Reserve Ratio | Reserve Ratio | Reserve Ratio | Benefits Ratio (differs) | Reserve Ratio |
| Benefits Charged in Proportion to Base-Period Wages | No (most recent or principal employer) | No (most recent or principal employer) | No (base-period employers in inverse chronological order) (differs) | Yes (differs) | Yes (differs) | Yes (differs) | No (most recent or principal employer) | Yes (differs) |
| Charged If Employee's Benefit Award Is Reversed | No | No | No | No | No | No | Yes (differs) | No |
| Charged for Reimbursements on Combined Wage Claims | No | No | No | Yes (differs) | No | No | No | Yes (differs) |
| Charged If Employee Left Voluntarily | No | No | No | No | No | No | Yes (differs) | No |
| Charged If Employee Was Discharged for Misconduct | No | No | No | No | No | No | Yes (differs) | No |
| Charged If Employee Refused Suitable Work | No | No | Yes (differs) | No | No | Yes (differs) | Yes (differs) | Yes (differs) |
| Charged If Employee Continues to Work Part-Time | No | No | No | No | No | No | Yes (differs) | No |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | Kentucky | Illinois | Indiana | Missouri | Ohio | Tennessee | Virginia | West Virginia |
|---|---|---|---|---|---|---|---|---|
| Solvency Tax | No | Yes (differs) | No | Yes (differs) | Yes (differs) | No | Yes (differs) | No |
| Taxes for Socialized Costs or Negative Balance Employers | No | No | No | No | Yes (differs) | No | Yes (differs) | Yes (differs) |
| Loan and Interest Repayment Surtaxes | Yes | No (differs) | Yes | Yes | No (differs) | Yes | No (differs) | Yes |
| Reserve Taxes | No | No | No | No | No | No | No | No |
| Surtaxes for UI Administration or Non-UI Purposes | Yes | No (differs) | No (differs) | Yes | Yes | No (differs) | No (differs) | No (differs) |
| Temporary Disability Insurance | No | No | No | No | No | No | No | No |
| Voluntary Contributions | Yes | No (differs) | Yes | Yes | Yes | No (differs) | No (differs) | Yes |
| Years to Qualify for Experience Rating | 3 | 3 | 3 | 2 (differs) | 1.5 (differs) | 3 | 1 (differs) | 3 |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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