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Kentucky levies a flat 3.5% income tax for 2026 — down from 4% in 2025 and 4.5% in 2024, part of a planned series of cuts that could eventually reach 3% if revenue targets keep being met.

A $70,000 single salary pays Kentucky roughly $2,332 after the $3,360 state deduction — an effective rate of 3.3% of gross. Louisville and Lexington add no city income taxes on wages, but most Kentucky counties levy a local occupational tax of roughly 1-2%.

Retirees: Kentucky exempts Social Security entirely and allows a $31,110 exclusion per person on most retirement income (pensions, 401(k) distributions, IRAs) once you meet the age and service requirements. Combined with the declining flat rate, that makes Kentucky one of the more retiree-friendly states among flat-tax states.

Property tax is cheap — 0.86% average effective, bottom-15 nationally — while the 6% state sales tax carries no local add-ons (Kentucky bans local sales taxes), leaving combined at a flat 6%. Kentucky's overall tax burden ranks among the lower third of states.

Filing in Kentucky: the resident return is Form 740, due to the Kentucky Department of Revenue by April 15. The state offers free e-file, and your employer handles withholding via the federal W-4 — Kentucky has no separate state withholding form.