How Kentucky Taxes Your Paycheck
Kentucky uses a flat income tax rate of 3.5%. Every dollar of taxable income above the standard deduction is taxed at the same rate.
Kentucky's state rate dropped from 4% to 3.5% in 2026 — but local occupational taxes can push effective rates above 5% in major cities.
Kentucky Local Taxes
Most Kentucky cities and counties impose a local occupational license tax (typically 1–2.5% on wages) — Louisville is 2.2%, Lexington is 2.25%.
Kentucky Job Market Context
Auto manufacturing (Toyota, Ford), bourbon, and logistics (UPS Worldport in Louisville).
Top Cities in Kentucky
The largest population centers in Kentucky — and where local tax rates may stack on top of state withholding:
- Louisville — 624,000 residents
- Lexington — 320,000 residents
- Bowling Green — 75,000 residents
How Kentucky Compares to Neighboring States
Single-filer take-home on a $75,000 annual salary in 2026, federal + state income tax + FICA only:
| State | Take-Home | vs. Kentucky |
|---|---|---|
| Kentucky (here) | $59,082 | — |
| Indiana | $59,410 | +$328 |
| Ohio | $60,312 | +$1,230 |
| West Virginia | $58,912 | -$170 |
| Virginia | $58,080 | -$1,002 |
| Tennessee | $61,593 | +$2,511 |
Take-home reflects single filer, no pre-tax deductions; SDI/PFML and local taxes excluded for an apples-to-apples comparison.
Frequently Asked Questions
What's the Kentucky state income tax rate?
Kentucky has a flat income tax rate of 3.5% for 2026. Whether you earn $40,000 or $200,000, your state tax rate is the same — applied to your taxable income after the standard deduction.
How much is taken out of my paycheck in Kentucky?
For a single filer earning $75,000 in Kentucky (2026), expect roughly $7,670 in federal income tax, $5,738 in FICA, and $2,511 in Kentucky state tax — leaving about $59,082 take-home (21.2% effective tax rate). SDI/PFML and local taxes (if any) come out of that as well.
Do Kentucky cities tax wages on top of state tax?
Most Kentucky cities and counties impose a local occupational license tax (typically 1–2.5% on wages) — Louisville is 2.2%, Lexington is 2.25%.
Is the Kentucky median household income enough to live comfortably?
The 2023 ACS reported a Kentucky median household income of about $64,500. Whether that's "comfortable" depends heavily on city — Louisville cost of living can differ substantially from rural areas. Use the calculator above to model your specific salary and deductions.
How does this Kentucky paycheck calculator work?
We calculate your annualized gross pay based on the pay frequency you select, then apply the 2025 or 2026 IRS percentage method for federal income tax, the Kentucky state tax schedule (if any), Social Security, and Medicare. Pre-tax deductions like 401(k) and Section 125 health premiums reduce your taxable base before withholding is computed. You can switch between salary and hourly modes; hourly mode applies time-and-a-half to hours over 40/week prorated by pay period.