Kentucky state income tax rate 2027

The statutory path

KRS 141.020(2) lists the flat rate by period: 4.5% for 2023, 4% for 2024 and 2025, and "for taxable years beginning on or after January 1, 2026, the tax shall be three and one-half percent (3.5%) of net income". So 2026 is 3.5%, and 3.5% is also the rate for 2027 unless it is reduced.

How a 2027 cut would work

Paragraph (g) says that for taxable years beginning on or after January 1, 2027 the rate "may be reduced". The Office of State Budget Director reviews the reduction conditions for fiscal year 2024-2025, and if they were met, the General Assembly "may take action" to reduce the 3.5% rate for the tax year beginning January 1, 2027; if the conditions were not met, or the General Assembly does not act, the department "shall maintain" 3.5% for 2027. Paragraph (g)4.b adds that the department shall not implement a reduction without an action by the General Assembly. A cut for 2028 follows the same process, with a September 5, 2026 report on fiscal year 2025-2026. The text read on November 1, 2026 contains no enacted 2027 reduction, so 3.5% is the projection.

Standard deduction

Kentucky's standard deduction is indexed and Tax Foundation lists $3,360 for 2026. It is not doubled for joint filers (only for married filing separately), so a couple filing jointly gets one $3,360 deduction here. Kentucky has no personal exemption in this calculation, only small credits that are not modelled.

Worked example

Single, $75,000 of wages, $3,360 standard deduction: taxable income $71,640 and tax $2,507.40 at 3.5%, an effective 3.34% of wages. A couple filing jointly with $120,000 of wages: $116,640 taxable and $4,082.40 tax. Many Kentucky couples both work and file separately to claim two deductions; this page does not model that.

Local occupational taxes

Tax Foundation counts Kentucky among the states where cities or counties levy their own income-based taxes, and those are not part of the 3.5%. The Kentucky paycheck calculator covers the state side of the pay stub.

Who this is for, and what it does not cover

It is for employees and planners estimating Kentucky state income tax on wages for 2027. It does not cover local income taxes, tax credits, retirement or investment income, self-employment tax, federal income tax or payroll taxes, and it does not file or submit anything. The result changes if you enter a different rate, so use the rate box when the state announces a final 2027 figure.

FAQ

What is the Kentucky state income tax rate for 2027?

KRS 141.020 sets 3.5% for taxable years beginning on or after January 1, 2026. A 2027 reduction needs General Assembly action, and none is enacted in the text read, so 2027 is projected at 3.5%.

Will Kentucky cut its income tax in 2027?

Possibly. The statute lets the General Assembly reduce the rate for 2027 if budget conditions were met, but the department cannot implement a cut without legislative action.

Is Kentucky income tax flat?

Yes. One rate applies to net income, with no brackets.

What is the Kentucky standard deduction?

Tax Foundation lists $3,360 for 2026, indexed annually. It is not doubled for married couples filing jointly.

Does the 3.5% include local taxes?

No. Cities and counties add occupational license taxes on wages that are separate from the state rate.

Is this my final 2027 Kentucky tax?

No. It is a projection at 3.5% using the 2026 deduction. Credits and local taxes are not included.

Sources

Retrieved 2026-11-01. Each link was opened and checked against the claim next to it; where a page blocks automated readers a dated archive copy is named.

• KRS 141.020 (Kentucky Legislative Research Commission): The 3.5% rate from 2026, the reduction conditions and the rule that a cut needs General Assembly action, read 2026-11-01.
• Tax Foundation: State Individual Income Tax Rates and Brackets, 2026: The $3,360 standard deduction and that it is not doubled for joint filers.