Kentucky State Income Tax
The Kentucky State Income Tax System is comprised of six tax rate brackets, with rates ranging from 2% to 6% depending on your level of income.
You are allowed a pension tax exclusion of up to $41,110. This is not a special exclusion, it is allowed for each taxpayer. The pension exclusion could exceed that amount if you are retired from federal, state or local government. If you’re pension exceeds that amount, use Schedule P to file.
The sales tax in Kentucky is at 6%. Exemptions include most staple grocery foods. On April 1, 2009, a 6% tax was also applied to alcohol, which previously had been exempt within the state.
Other State Taxes
Unless exempted by the constitution, all classes of property are taxed by the state, though they are each taxed at wildly varying rates. Local government also exempts many of the classes from property tax.
As for the remaining classes that are subject to property tax, three classes are set by the Kentucky State General Assembly, one by the Kentucky supreme court, and the rest are subject to the full local rate, which includes the rate set by the local taxing bodies and voted levies.
Property taxes are due by December 31, and real property is assessed by 100% of it’s fair market value. Though property taxes only represent 6% of Kentucky’s annual General Fund, they used to make up a major part of the Kentucky state and local revenue.
There was a tax on intangible personal property (bonds, notes, trusts, annuities, accounts receivable, etc.) that was held by a taxpayer January 1 of each year. On January 1, 2006, the tax was repealed under the House Bill 272. Intangible property was considered to be any investment or property that represents evidence or the right of value.
If you file your return online then you can also e-file it at the same time. E-filing your return guarantees you the fastest way to receive your tax refund.