Taxes in Kentucky


Retirement Living takes an unbiased approach to our reviews. We may earn money when you click a partner link. Learn More

Kentucky - State

Kentucky lowered its income tax rate in 2023 but expanded its sales tax to include 34 more service categories. Below, we explain various Kentucky state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.

For information regarding taxes in other states, see Retirement Taxes by State.

Great Advisor Network

4.7 Stars


  • Finding an advisor near you
  • No-fee options

Visit Site

Kentucky Tax Rates

State Sales Tax6%
Avg State/Local Sales Tax6%
Gas Tax$0.25 per gallon
Diesel Tax$0.22 per gallon
Cigarette Tax$1.10 per pack
Income Tax4.5%
Effective Tax Rate:4.5%
Property Tax0.86%
Social Security TaxNone
Medical/Dental Deduction:None
Federal Income Tax Deduction:None
Retirement TaxPartial
State Taxes in Kentucky

Kentucky State Taxes Explained

Kentucky Sales Tax

6%. Kentucky does not levy a local tax. Effective January 2023, the state will impose a sales tax on vehicle rentals, peer-to-peer car sharing rentals, taxicab, limousine services, and more. In 2024, the state will introduce a 3% tax on electric vehicle power and electric vehicle registration.

Kentucky Income Taxes

A flat rate of 4.5%, down from 5% in 2022.

Kentucky Property Taxes

Kentucky’s effective average property tax rate is 0.86%, or $1,210 on the average assessed home value of $141,000.

Kentucky has a Homestead Exemption on the assessed value of a qualifying single-unit residential property. This tax break is adjusted every two years based on the cost of living index. Homeowners aged 65 and older or classified as totally disabled by a federal or state agency may be eligible. Visit the Kentucky Homestead Exemption page for more information.

Kentucky Retirement Taxes

Social Security and Roth IRA distributions are exempt. Kentucky excludes up to $31,110 for state, private and military retirement plans. Kentucky taxes military retirement pay the same as any other retirement income: exclude $31,110 from the Kentucky tax return.

Kentucky Estate and Inheritance Taxes

Kentucky has no estate tax. The inheritance tax is assigned to one of three classes.

  • Class A beneficiaries are closest relatives (spouse, parent, child, grandchild, brother and sister). These individuals pay no tax.
  • Class B beneficiaries are nieces, nephews, half-nieces, half-nephews, daughters-in-law, sons-in-law, aunts, uncles and great-grandchildren. The inheritance tax rate ranges from 4% to 16%, depending on the value of the inherited property. Kentucky excludes the first $1,000 of property value from inheritance tax.
  • Class C individuals are all relatives not otherwise classified, including nieces and nephews by marriage and great-nieces and great-nephews. These heirs are taxed 6% to 16% on property received with a $500 exclusion.

For more information, see the Guide to Kentucky Inheritance or visit the Kentucky Department of Revenue.

Advertising Disclosure

We may earn money from our partners when you click a link, complete a form or call a phone number.

We believe everyone deserves to make thoughtful, informed purchase decisions. As a result, we provide our buyers guides and local guides free for consumers. We may receive compensation from our partners. However, Retirement Living independently researches companies, and the compensation we receive does not affect the analysis of our staff. Retirement Living will not include companies on our guides that do not meet our quality standards. The compensation we receive from our partners may impact how and where companies appear on our site, including the order in which they appear. As an Amazon Associate Retirement Living earns from qualifying purchases.

Retirement Living independently researches companies, and we use editorial discretion to award companies with special recognition (i.e. Great Value) based on our staff’s judgment. We do this to help you identify companies that will meet your specific buying needs, and we do not receive compensation for these designations.

Get Insider Access

Get special offers, advice and tips from Retirement Living delivered to your inbox.

Get Insider Access

Get special offers, advice and tips from Retirement Living delivered to your inbox.