Kentucky's state rate dropped to 3.5% on 1 January 2026. Almost everywhere in the state, the local occupational tax you also pay is a significant fraction of that again.
| Gross pay | — |
| Federal income tax | — |
| Social Security6.2% up to $184,500 | — |
| Medicare1.45%, no cap | — |
| State income tax | — |
| 401(k) contribution | — |
| Health and HSA | — |
Useful if you are comparing a job that pays monthly against one that pays every two weeks, or working out what a raise is worth per paycheck.
| Pay schedule | Gross | Take-home |
|---|
Kentucky's flat rate fell from 4% to 3.5% at the start of 2026, continuing a phase-down that began at 5% in 2022. The mechanism is a revenue trigger — but unlike most trigger states, Kentucky requires the legislature to ratify each reduction rather than letting it happen automatically.
That is a meaningful distinction. In Indiana or Georgia the cuts arrive on schedule if the numbers allow; in Kentucky each step needs an affirmative vote, which the legislature has so far consistently provided. It makes the trajectory slightly less certain but the reductions no less real.
Kentucky's standard deduction is $3,360 — and it is $3,360 for a married couple filing jointly too, not $6,720.
Married taxpayers are permitted to file separately on the same Kentucky return, which allows each spouse to claim the deduction individually. Doing so is routine in Kentucky specifically because of this quirk, and a couple who files jointly out of habit gives up roughly $118 in tax for no reason.
This calculator applies the joint figure as published. If you are married and filing in Kentucky, look into filing separately on a combined return before submitting.
Most Kentucky cities and counties levy an occupational licence tax on wages, and they are not small. Louisville's combined rate is around 2.2% and Lexington's around 2.25%, with many smaller jurisdictions charging between 1% and 2%.
Against a 3.5% state rate, a Louisville resident is paying roughly 60% again on top of what the state takes. Kentucky has the second-highest average local income tax burden in the country after Maryland, and it is the reason Kentucky's low flat rate should not be taken at face value.
The tax is generally levied where you work rather than where you live, and some jurisdictions tax both, so a commuter can face two. This calculator shows state tax only.
Kentucky maintains reciprocity agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin — more than almost any other state, reflecting how many borders it has.
If you live in Kentucky and work in one of them, or the reverse, you pay income tax only to your state of residence. Note that reciprocity covers state income tax only; local occupational taxes sit outside these agreements and still apply where the work is performed.
Often not. The standard deduction of $3,360 is not doubled for joint filers, but couples may file separately on the same return and claim it each. Filing jointly out of habit costs roughly $118.
Commonly 1% to 2.5%. Louisville is around 2.2% and Lexington around 2.25%. Kentucky has the second-highest average local income tax burden in the country.
Ohio for state income tax, under the reciprocity agreement. But the Kentucky local occupational tax still applies where you work, because reciprocity does not cover local taxes.
It fell to 3.5% in 2026 as part of an ongoing phase-down, though each step requires the legislature to ratify it rather than happening automatically.