Kentucky Take-Home Pay Calculator

Q: What is Kentucky's state income tax rate?

Kentucky has a flat state income tax rate of 4% for the 2025 tax year, dropping to 3.5% for the 2026 tax year under House Bill 1, passed with strong bipartisan support in the 2025 legislative session.

Q: Does Kentucky tax Social Security benefits?

No. Kentucky fully exempts Social Security retirement benefits from state income tax, regardless of a retiree's other income.

Q: Does Kentucky have local city income tax?

Yes. Many Kentucky cities and counties, including Louisville and Lexington, levy a local occupational tax on wages — typically 1% to 2.5% — on top of the flat state rate. This calculator shows state tax only.

Q: Why is Kentucky's rate dropping in 2026?

House Bill 1 cut the flat rate from 4% to 3.5% starting with the 2026 tax year, part of an estimated $718 million in annual statewide tax savings under the legislation.

Estimate your Kentucky paycheck using KY's flat 4% state income tax rate for 2025, plus federal income tax and FICA.

Written by the Calculator Index team · Source: Kentucky Department of Revenue (flat 4% rate, House Bill 1 phase-down); IRS 2025 federal figures · Last reviewed September 2026

Take-home pay per paycheck

—

Annual take-home

—

Monthly take-home

—

Federal income tax

—

Kentucky state tax (4%)

—

Social Security (6.2%)

—

Medicare (1.45%+)

—

What comes out of a Kentucky paycheck

Net pay = Gross − Federal income tax − ((Gross − Pre-tax − $3,270 standard deduction) × 4%) − Social Security − Medicare − Pre-tax deductions

Kentucky taxes all income at a flat 4% for 2025, one of 15 states with a flat-rate system. The rate is scheduled to drop to 3.5% for the 2026 tax year under House Bill 1, part of a broader package of state tax reductions passed with bipartisan support.

Worked example — $80,000, single, biweekly

KY-taxable income: $80,000 − $4,000 pre-tax − $3,270 standard deduction = $72,730. KY tax: $72,730 × 4% = $2,909.20.

Federal tax (on $61,000 taxable) ≈ $8,334 · KY state tax ≈ $2,909 · Social Security $4,960 · Medicare $1,160.

Annual take-home ≈ $58,637 → about $2,255 per biweekly paycheck (73.3% of gross) — before any local occupational tax.

Kentucky's local occupational taxes — the part the state rate doesn't show

Many Kentucky cities and counties — including Louisville (Jefferson County), Lexington (Fayette County), and others — levy a local occupational license tax on wages earned within their boundaries, typically 1% to 2.5% on top of the flat state rate. Because these rates vary significantly by location, this calculator intentionally shows state tax only; check your city or county's specific rate for the full picture.

The rate is dropping again in 2026

The 4% rate used in this calculator applies to the 2025 tax year. It's scheduled to fall to 3.5% for 2026 under House Bill 1 — part of an estimated $718 million in annual statewide tax savings. Kentucky's flat rate has been on a downward trend for several years as the legislature has repeatedly cut it when revenue conditions allowed.

Common mistakes when estimating Kentucky take-home pay

Forgetting local occupational tax. Many Kentucky cities and counties add 1%-2.5% on top of the state rate.
Using the wrong tax year's rate. The rate drops from 4% to 3.5% starting with the 2026 tax year.
Assuming Social Security is taxed. Kentucky fully exempts it, regardless of other income.

Frequently asked questions

What is Kentucky's state income tax rate?

A flat 4% for 2025, dropping to 3.5% for 2026 under House Bill 1.

Does Kentucky tax Social Security benefits?

No — Social Security is fully exempt regardless of other income.

Does Kentucky have local city income tax?

Yes — many cities and counties, including Louisville and Lexington, levy a local occupational tax of 1%-2.5%.

Why is Kentucky's rate dropping in 2026?

House Bill 1 cut the flat rate to 3.5%, part of an estimated $718 million in annual statewide tax savings.

Related calculators

Note: Simplified estimate using 2025 state and federal figures; excludes local occupational tax, credits, and benefit specifics. Not tax advice. Figures: 2025 Kentucky and federal tax year (rate scheduled to drop to 3.5% for 2026). Last reviewed: September 2026.