Kentucky Income Tax Facts 2026
Kentucky has a flat 4.0% state income tax rate that applies to all taxable income — one of the cleaner state tax systems in the US. Unlike states with progressive brackets (where higher earners pay more), everyone in Kentucky pays the same 4% rate regardless of income level.
Kentucky reduced its flat tax rate from 5% to 4.5% in 2023, then to 4.0% in 2024. Further reductions are possible if state revenue targets are met. This makes Kentucky increasingly competitive with low-tax Southern states.
Kentucky Tax Breakdown
| Tax Type | Rate | Notes |
|---|---|---|
| Kentucky State Income Tax | 4.0% flat | Applies to all income including overtime |
| Louisville/Jefferson Co. Local | 2.2% | Occupational tax on wages |
| Lexington-Fayette Local | 2.25% | Occupational tax on wages |
| Most Other KY Cities | 1%–2% | Varies by city/county |
| Federal Income Tax | 10%–37% | Based on income and filing status |
| Social Security | 6.2% | Up to $176,100 wage base (2026) |
| Medicare | 1.45% | All wages; +0.9% above $200K |
Kentucky Minimum Wage 2026
Kentucky's state minimum wage is $7.25/hr — the same as the federal minimum. Kentucky has not raised its own minimum wage above the federal floor. The overtime rate based on minimum wage is $10.88/hr ($7.25 × 1.5).
Many employers in Louisville and Lexington pay above minimum wage due to competition. Fast food workers in Kentucky typically earn $12–$14/hr; warehouse workers $15–$18/hr.
Kentucky vs. Neighboring States: Tax Comparison
| State | Income Tax | Min Wage | No Local Tax? |
|---|---|---|---|
| Kentucky | 4.0% flat | $7.25/hr | Some cities have local tax |
| Tennessee | 0% (no wage tax) | $7.25/hr | Generally no |
| Ohio | 0%–3.75% | $10.70/hr | Many cities have local tax |
| Indiana | 3.05% flat | $7.25/hr | County taxes apply |
| Virginia | 2%–5.75% | $12.41/hr | Some localities |
Frequently Asked Questions
What is Kentucky's state income tax rate in 2026?
Kentucky's flat state income tax rate is 4.0% in 2026. This applies to all taxable wages, salaries, and overtime pay at the same rate regardless of income level.
Does Kentucky have local income taxes?
Yes. Many Kentucky cities impose an occupational (local) tax: Louisville/Jefferson County: 2.2%, Lexington-Fayette: 2.25%, and most other cities 1%–2%. This is collected by your employer and remitted to the city.
Is overtime taxed in Kentucky?
Yes — overtime pay is subject to the same 4% Kentucky flat income tax, plus federal income tax and FICA. Working overtime always increases your take-home pay, even after taxes.
What is Kentucky's minimum wage in 2026?
Kentucky's minimum wage is $7.25/hr (federal minimum). Overtime for minimum wage workers: $10.88/hr ($7.25 × 1.5).
Related: Tennessee Paycheck Calculator · Overtime Calculator · Time and a Half Calculator · Salary Increase Calculator · Hourly to Annual Salary