Estimate your take-home pay in Kentucky. The state applies a single flat income tax rate of 3.5% to taxable wages, so every paycheck gives up the same share to state tax on top of federal withholding, Social Security, and Medicare.
Disclaimer: All figures on this page are estimates for general informational purposes only and are not financial, tax, or legal advice. Tax rates, brackets, and withholding rules change and vary by locality and personal circumstances. Verify current rates with the Kentucky Department of Revenue or the IRS, and consult a qualified tax professional before making financial decisions.
Kentucky Tax Snapshot
- State Income Tax
- 3.5% top rate
- Sales Tax (state + local avg)
- 6.00%
- Avg Property Tax Rate
- 0.83%
- Median Home Value
- $177,100
- State Minimum Wage
- $7.25/hr
Did You Know?
Kentucky's flat individual income tax fell from 4% to 3.5% on January 1, 2026 under the revenue triggers adopted in 2022.
Kentucky vs. Other Flat-Tax States
Kentucky is one of 15 states that apply a single flat rate to taxable wages instead of graduated brackets. Its 3.5% rate is the 6th-lowest in that group, which runs from Arizona at 2.5% to Idaho at 5.3%.
Measured against all 42 states and jurisdictions that tax wages, Kentucky's 3.5% rate ranks 36th-highest and sits below the national median top rate of 5.25%.
For comparison, nearby states line up like this: Indiana (top rate 2.95%); Missouri (top rate 4.7%); Ohio (top rate 2.75%); Tennessee (no income tax); Virginia (top rate 5.75%).
How Kentucky's Flat Tax Affects Your Take-Home Pay
When you earn a paycheck in Kentucky, your employer withholds federal income tax, Social Security (6.2%), and Medicare (1.45%). On top of that, the state withholds income tax based on flat rate of 3.5%. The state minimum wage is $7.25 per hour, which sets the floor for hourly workers. Understanding these deductions helps you budget effectively and plan for the average 0.83% property tax rate on homes valued around $177,100.
Kentucky also levies a combined state and average local sales tax of 6.00%, which affects your overall purchasing power. Factor this into your budget when calculating how far your paycheck stretches.
Where You Live vs. Where You Work in Kentucky
Kentucky has income tax reciprocity agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin. If you live in Kentucky and work in one of those jurisdictions — or the other way round — your wages are taxed only by your state of residence, provided you file the non-residence certificate your employer's state requires. Without that form on file, the work state will withhold anyway and you will have to claim it back.
Most Kentucky counties and cities levy an occupational licence tax on wages, withheld where you work rather than where you live. Local withholding is separate from the state line on your pay stub, so check it explicitly if you move house or change work location without changing employer.