Personal income tax
Kentucky collects income taxes from its residents at the following rates:
- 2 percent on the first $3,000 of taxable income.
- 3 percent on taxable income between $3,001 and $4,000.
- 4 percent on taxable income between $4,001 and $5,000.
- 5 percent on taxable income between $5,001 and $8,000.
- 5.8 percent on taxable income between $8,001 and $75,000.
- 6 percent on taxable income of $75,001 and above.
Kentucky tax returns are due April 15, or the next business day if that date falls on a weekend or holiday.
The state's maximum pension income exclusion remains at $41,110 for filers who are retired from the federal, state or local government or who receive supplemental U.S. Railroad Retirement Board benefits. The exclusion amount is no longer adjusted annually for inflation.
In 2005, Kentucky's family size tax credit replaced the state's low-income tax credit. The maximum credit eligibility thresholds for the 2014 tax year are $11,670 for a family size of one; $15,730 for a family of two; $19,790 for a family of three; and $23,850 for a family of four or more. Residents who make more for their family size could get a reduced credit.
The sales tax rate in Kentucky is 6 percent.
A 6 percent use tax may be due if you make out-of-state purchases for storage, use or other consumption in Kentucky.
Personal and real property taxes
Property tax is levied on the fair cash value of all real and personal property unless a specific exemption exists in the Kentucky Constitution or, in the case of personal property, has been granted by the General Assembly.
Details on the various property tax classifications and rates can be found in the 2014 Property Tax Rates publication, the latest compilation of this data.
Kentucky's Department of Revenue offers property tax information for each county.
Kentucky offers taxpayers a homestead exemption to homeowners who are 65 years of age or older or classified as totally disabled. Contact your county's Property Valuation Administrator for details and application for the homestead exemption.
Inheritance and estate taxes
Kentucky collects an inheritance tax, which is a tax on the right to receive property from a decedent's estate.
If all taxable assets pass to exempt beneficiaries and a Federal Estate and Gift Tax Return is not required, it is not necessary to file an Inheritance Tax Return with the Kentucky Department of Revenue.
Since Jan. 1, 2005, there has been no Kentucky estate tax.
Other Kentucky tax facts
A motor vehicle usage tax of 6 percent is collected on every motor vehicle used in Kentucky. The tax is collected by the county clerk or other officer with whom the vehicle is required to be registered at the time of transfer of ownership or when a vehicle is offered for registration for the first time in Kentucky. License tags will not be issued until the tax is paid.
Fiduciaries must pay income tax on the portion of income from an estate or trust not distributed or distributable to beneficiaries. The tax is calculated using a graduated rate of 2 percent to 6 percent.
Kentucky excludes all income from all sources for active duty and reserve members of any U.S. military branch or the National Guard who are killed in the line of duty.