Kentucky State Taxes: A Simple Guide
Kentucky has a state income tax, local occupational or wage taxes in many areas, a state sales tax, and local property taxes. This guide explains the basics in plain language for individuals.
ℹ️Important: This overview does not include every exemption, local rule, or tax credit. Always check official Kentucky guidance or talk with a tax professional for current details.
🐴Kentucky state income tax
Kentucky taxes personal income with its own rules. In general:
- •Residents with income above certain thresholds must file a Kentucky income tax return.
- •Nonresidents may need to file if they earn Kentucky-source income.
- •Kentucky's definitions of taxable income, deductions, and credits differ from federal rules.
A typical resident files a federal Form 1040 and a Kentucky return for the same year if they meet filing requirements.
🏙️Local occupational / wage taxes
Many Kentucky cities and counties impose local occupational taxes or wage taxes on top of the state income tax. These are often withheld from paychecks by employers.
- •The rate and rules vary by city or county where you live or work.
- •In some cases, you may need to file local returns in addition to your state return.
Note: Check with your local government or employer for details on your specific local occupational taxes.
🛒Sales and use tax
Kentucky has a state sales and use tax on many retail sales of tangible goods and some services.
- •Some goods or services may be exempt or taxed differently.
- •If you purchase taxable items online or out of state without tax, you may owe use tax to Kentucky.
Businesses selling taxable goods or services generally must collect and remit sales tax to the state.
🏡Property taxes
Property taxes in Kentucky are imposed by counties, cities, and school districts, based on the assessed value of real property, like homes and land.
- •Homeowners receive tax bills from local authorities.
- •Property taxes help fund schools, local services, and infrastructure.
- •Certain exemptions or relief programs may be available for qualifying homeowners.
🔗Putting Kentucky taxes together
A typical Kentucky resident may encounter:
- •Federal income tax (Form 1040)
- •Kentucky state income tax
- •Local occupational or wage taxes
- •State sales and use tax
- •Local property taxes if they own a home
Once you understand how filing works, it's easier to see how Kentucky's layers of tax fit into the big picture.