Research Areas
Kentucky
The Facts on Kentucky's Tax Climate
Here are some basic facts on Kentucky's tax system and how it compares to other states:
Tax Freedom Day Arrives on April 3 in Kentucky
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Kentucky taxpayers had to work until April 3 (ranked 41st nationally) to pay their total tax bill, 10 days earlier than national Tax Freedom Day (April 13). Neighboring states' Tax Freedom Days are: Illinois, April 13 (ranked 15th nationally); Indiana, April 8 (ranked 28th nationally); Ohio, April 11 (ranked 21st nationally); West Virginia, April 1 (ranked 45th nationally); Virginia, April 16 (ranked 6th nationally); Tennessee, April 5 (ranked 36th nationally); and Missouri, April 6 (ranked 34th nationally).
Full study of Tax Freedom Day, nationwide and in each state
Kentucky's State/Local Tax Burden Below Average
Estimated at 9.4% of income, Kentucky's state/local tax burden percentage is ranked 25th highest nationally, below the national average of 9.7%. Kentucky taxpayers pay $3,243 per capita in state and local taxes.
Kentucky's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Kentucky's 2009 Business Tax Climate Ranks 34th
Kentucky ranks 34th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Illinois (23rd), Indiana (14th), Ohio (47th), West Virginia (36th), Virginia (15th), Tennessee (17th), and Missouri (16th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
Kentucky's Individual Income Tax System
Kentucky's personal income tax system consists of six brackets with a top rate of 6% kicking in at $75,000. The top rate is 21st highest nationally among states levying personal income taxes. Kentucky's 2006 individual income tax collections were $937 per person, which ranked 18th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Kentucky's Corporate Income Tax Structure
Kentucky's corporate tax structure consists of three brackets with a top rate of 6%, kicking in at $100,000. Among states levying corporate income taxes, Kentucky's top rate is 36th highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $234 per capita, ranking 10th highest nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita
Kentucky Levies Sales Tax above National Median; Cigarette Taxes among the Lowest Nationally
Kentucky levies a 6% general sales or use tax on consumers, which is above the national median of 5.4 percent. In 2006, combined sales tax collections from state and local governments were $659 per capita, which ranked 40th nationally. Kentucky's gasoline tax is variable and depends on the current price of gasoline. At the start of 2009, Kentucky's gasoline tax equaled 22.5 cents per gallon and ranked 30th nationally. Kentucky's state-level cigarette tax stands at 30 cents per pack of twenty, which ranks 46th highest nationally. The sales tax was adopted in 1960, the gasoline tax in 1920 and the cigarette tax in 1936.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita
Kentucky's Property Taxes
KentuckyKentucky is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Kentucky's localities collected $457.40 per person in property taxes in fiscal year 2006, the latest year for which the Census Bureau has published state-by-state data. At the state level, Kentucky collected $ 120.65 per person during FY 2006, bringing its combined state/local property taxes to $578.04 per capita, ranking 45th nationally. nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Kentucky is a Beneficiary State
Kentucky taxpayers receive more federal funding per dollar of federal taxes paid than the average state. Per dollar of federal tax collected in 2005, Kentucky citizens received approximately $1.51 in the way of federal spending. This ranks the state 9th highest nationally and represents a rise from 1995 when Kentucky received $1.28 per dollar of taxes in federal spending (ranked 13th nationally). Neighboring states and the federal spending received per dollar of federal taxes collected were: Illinois ($0.75), Indiana ($1.05), Ohio ($1.05), West Virginia ($1.76), Virginia ($1.51), Tennessee ($1.27), and Missouri ($1.32).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
