Kentucky state tax: Overview
Kentucky has a flat personal income tax rate, some local additional taxes on wages, and an inheritance tax. However, the Bluegrass State prevents local governments from adding to the state's comparatively modest sales tax rate.
Property taxes in Kentucky have typically been low on average compared to other states.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
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Kentucky income tax rate
Kentucky generally has a flat income tax rate for 2024 of 4.0%. Last year, the income tax rate was 4.5%.
Further 0.5% reductions are possible in future years if certain revenue and budget conditions are met.
- Social Security: Not taxable
- Pensions: Partially Taxable
- 401(k) and IRA Distributions: Taxable
- Railroad Retirement benefits are also exempt from tax in Kentucky.
Note: A $31,110 deduction is available in Kentucky for state, private and military retirement plans.
Kentucky sales tax
Kentucky's state sales tax rate is 6%. There are no local taxes in the state.
Groceries: Exempt
Clothing: Taxable
Motor Vehicles: Exempt if 6% motor vehicle usage tax is paid
Prescription Drugs: Exempt
How much are property taxes in Kentucky?
In Kentucky, the average property tax paid is 0.83% per assessed home value, according to the Tax Foundation.
Kentucky Property Tax Breaks for Retirees
For homeowners 65 and older, $46,350 of the assessed value of residential property is exempt from Kentucky taxes for 2024.
Kentucky gas tax
| Product | Tax Amount |
|---|---|
| Gasoline | $0.25 per gallon |
| Diesel | $0.22 per gallon |
Source: The Sales Tax Handbook
Kentucky taxes on alcohol and tobacco
Kentucky tobacco taxes
| Product | Tax Amount |
|---|---|
| Cigarettes | $1.10 per pack of 20 |
| Snuff | $0.19 per unit of 1.5 ounces |
| Chewing tobacco | Approximately $0.19 for a single unit (net weight less than 4 ounces sold) |
| Other tobacco products | 15% of wholesale price |
Source: The Sales Tax Handbook
Kentucky alcohol taxes
| Product | Tax |
|---|---|
| Beer | $0.08 per gallon |
| Wine | $0.50 per gallon |
| Liquor | $1.92 per gallon |
Note: A 10.75% sales tax is also charged at the wholesale level.
Source: The Sales Tax Handbook
Kentucky estate and inheritance taxes
Kentucky has an inheritance tax, but the decedent's spouse, parents, children, grandchildren, and siblings are exempt.
- Nieces, nephews, daughters-in-law, sons-in-law, aunts, uncles, and great-grandchildren are taxed at rates ranging from 4% to 16%, depending on the value of the property inherited (the first $1,000 of property is exempt).
- All other heirs are taxed at rates ranging from 6% to 16% (their exemption is only for the first $500 of property).
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