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Kentucky taxes at a glance (2026)

Kentucky has a flat 3.50% income tax with a standard deduction of $3,360 (single) / $3,360 (married). Flat tax. Rate cut from 4.0% to 3.5% effective Jan 1, 2026 (HB 1, 2025 session). Standard deduction is a single statewide amount of $3,360 for 2026 (announced by DOR Sep 2025, +$90 inflation adjustment, set annually per KRS 141.081); it does NOT vary by filing status, so MFJ is also $3,360 (a married couple filing a joint return claims one $3,360 deduction; spouses filing separately on a combined return each claim it). No personal exemptions. Social Security benefits are fully exempt. Up to $31,110 per person of other retirement income (pensions, IRA/401(k), annuities) is excluded; amounts above may be partially taxable based on service before/after Jan 1, 1998. IMPORTANT: many Kentucky cities and counties levy LOCAL occupational license taxes on wages (gross-wage payroll tax, not on KY taxable income) - e.g. Louisville Metro ~2.2%, Lexington-Fayette 2.25%, Covington 2.45%, Bowling Green ~1.85%. These are separate from the 3.5% state tax. No state-level local add-on to the income tax itself.