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 2 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 2011, Kentucky taxpayers work until April 2 (ranked 42nd nationally) to pay their total tax bill, 10 days earlier than national Tax Freedom Day (April 12). Neighboring states' Tax Freedom Days are: Illinois, April 15 (ranked 9th nationally); Indiana, April 5 (ranked 32nd nationally); Ohio, April 6 (ranked 28th nationally); West Virginia, March 31 (ranked 44th nationally); Virginia, April 12 (ranked 14th nationally); Tennessee, March 27 (ranked 49th nationally); and Missouri, April 4 (ranked 33rd nationally).
Full study of Tax Freedom Day, nationwide and in each state
Kentucky's State and Local Tax Burden Below National Average
Kentucky's 2009 state and local tax burden of 9.3% of income is below the national average of 9.8%. Kentucky's tax burden has decreased overall from 9.6% (30th nationally) in 1977 to 9.3% (30th nationally) in 2009. Kentucky taxpayers pay $3,059 per capita in state and local taxes.
Kentucky's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009
Kentucky's 2012 Business Tax Climate Ranks 22nd
Kentucky ranks 22nd 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 rank as follows: Illinois (28th), Indiana (11th), Ohio (39th), West Virginia (23rd), Virginia (26th), Tennessee (14th), and Missouri (15th).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth 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 23rd highest nationally among states levying personal income taxes. Kentucky's 2008 state-level individual income tax collections were $815 per person, which ranked 30th 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 35th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $125 per capita, ranking 32nd 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 Sales and Excise Taxes
Kentucky levies a 6% general sales or use tax on consumers, which is slightly above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,200 per person, which ranked 36th 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 60 cents per pack of twenty, which ranks 39th 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, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
Kentucky's Property Taxes
Kentucky 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
