📅 2026 Update: Kentucky State Tax Changes

Since the original article was written, Kentucky has made significant updates to its tax laws. One major change is the establishment of a Pass-Through Entity Tax (PTET) under HB 360, passed on March 24, 2023. This aligns Kentucky with similar tax structures in other states.

The earlier article continues further down the page for additional context on state tax in Kentucky.

📊 New Pass-Through Entity Tax (PTET)

Kentucky's PTET is designed for businesses that pass income to owners or shareholders. This tax allows entities to pay taxes at the entity level instead of passing the tax burden to individual owners. This can simplify tax filing for many business owners.

  • 💼 Who it affects: The PTET primarily impacts partnerships and S corporations operating in Kentucky. Owners of these entities may benefit from the new tax structure.

📅 Tax Filing Deadlines

With the introduction of the PTET, businesses will need to pay attention to new filing deadlines. The PTET generally requires entities to file by the 15th day of the 4th month after the end of their tax year.

  • ⏰ Important dates: Keeping track of these deadlines is essential to avoid penalties and ensure compliance with state tax laws.

📉 Changes to Deductions and Credits

Kentucky has also updated available deductions and credits for taxpayers. These changes aim to encourage business growth and investment in the state.

  • 💵 Tax benefits: Business owners should review the current deductions and credits when filing their taxes to maximize potential savings.

📈 Processing Times for Tax Forms

Processing times for state tax forms may vary due to the new PTET. Taxpayers should be aware that submissions might take longer during peak filing seasons.

  • 🕒 Stay informed: It's a good idea to regularly check for updates on processing times to plan accordingly.

📌 Key Points to Remember

  • 🏢 Kentucky established a PTET for partnerships and S corporations.
  • 📅 New filing deadlines apply to PTET submissions.
  • 💰 Updated deductions and credits may benefit taxpayers.
  • 🕒 Processing times for tax forms could be longer.

💡 Tips for Kentucky State Tax Preparation

Reviewing your specific situation with an attorney can help clarify your tax obligations and options.

🧾 Keep Records Updated

Maintaining accurate records of your income and expenses is crucial for tax preparation. This helps ensure that you claim all eligible deductions and credits.

📅 Know Your Deadlines

Be aware of tax filing deadlines to avoid penalties. This includes both personal and business tax returns, especially with new PTET requirements.

💼 Understand Pass-Through Taxes

If you are part of a partnership or S corporation, familiarize yourself with the PTET. Knowing how it affects your taxes can save you time and money.

📊 Review Available Deductions

Kentucky offers various deductions that can lower your taxable income. Make sure to review these before filing to maximize your tax benefits.

🆓 Consider Free Tax Help

Utilize free resources like IRS Free File and VITA for assistance with your tax returns. These services can help ensure you meet all requirements.

📝 Stay Informed on Tax Changes

Tax laws can change frequently. Keep up with updates from the Kentucky Department of Revenue to stay compliant and informed.

🏆 Kentucky State Tax Services Ranked by User Reviews (2026)

This section lists tax preparation services that cater to Kentucky residents. These services are ranked based on Trustpilot data from October 2026. Ratings can change as more customers leave reviews.

Remember that star ratings reflect customer experiences, and services may have varying strengths and weaknesses.

🥇 1. KBO Tax & Accounting Services

KBO Tax & Accounting Services has been rated 4.5. It is known for its nationwide tax preparation and bookkeeping services. However, it has limited in-person office locations, which may not suit everyone.

🥈 2. Advanta Tax

Advanta Tax holds a score of 4.3. It offers nationwide tax services including IRS resolution and state tax debt assistance. Some clients have reported delays in service, which could be a concern for those needing timely support.

🥉 3. SMAART Tax

SMAART Tax averages a score of 4.4. This service provides virtual tax solutions across all 50 states. Users should note that it primarily operates online, limiting in-person consultations.

4️⃣ Libre Tax Service

Libre Tax Service has a rating of 4.1. It specializes in online tax preparation and IRS audit defense. However, some users find navigating its website challenging, which could affect the user experience.

5️⃣ Jackson Hewitt Tax Service

Jackson Hewitt Tax Service has received a score of 4.2. It is known for its tax preparation services with numerous locations nationwide. Despite its wide reach, there have been complaints about customer service responsiveness.

6️⃣ TaxSlayer

TaxSlayer holds a rating of 4.0. This company offers online tax preparation software at affordable prices. Users have reported occasional software glitches, which may impact the filing process.

🆓 Free Tax Assistance Options

Several free resources are available for taxpayers in Kentucky. Options include the IRS Free File program for eligible individuals and the Volunteer Income Tax Assistance (VITA) program, which offers help to those who need it. These services can be beneficial for those who may struggle with tax preparation costs.

🔎 What to Compare When Choosing Tax Services

  • 📊 Trustpilot scores and review counts for reliability.
  • 💻 Service offerings to ensure they meet your needs.
  • 🕒 Processing times for tax filings and responses.
  • 🚀 Availability of free assistance programs.
  • 🏢 In-person versus virtual services based on personal preference.

❓ Frequently Asked Questions

❓ What is the Pass-Through Entity Tax in Kentucky?

The Pass-Through Entity Tax (PTET) in Kentucky allows certain businesses to pay taxes at the entity level instead of passing it to individual owners. This tax structure aims to simplify tax filing for partnerships and S corporations.

⏰ When is the deadline for filing the PTET?

The deadline for filing the PTET is generally the 15th day of the 4th month after the end of the entity's tax year. It is important to keep track of these deadlines to avoid penalties.

💰 Are there any new deductions available for Kentucky taxpayers?

Kentucky has updated its available deductions and credits for taxpayers. These changes aim to support business growth, so it is beneficial to review them when preparing your taxes.

📈 How can I access free tax assistance in Kentucky?

Free tax assistance in Kentucky is available through programs like IRS Free File and Volunteer Income Tax Assistance (VITA). These services can help with tax preparation and filing.

📊 What resources can I use to stay updated on tax changes?

Taxpayers can stay informed by checking the Kentucky Department of Revenue's website and other official resources. It is crucial to keep up with any changes that may affect tax filing.

📝 What should I do if I haven't received my tax refund?

If you have not received your tax refund, you can complete Form 3911, Taxpayer Statement Regarding Refund, to request a trace. This form can help you track down the status of your refund.

⚖️ Recent Court Cases Related to Kentucky State Tax

Recent court rulings have addressed various aspects of Kentucky's tax laws, including the new Pass-Through Entity Tax and its implications for businesses. These rulings can provide insights into how the tax laws are interpreted and enforced.

For more recent rulings, you can browse more rulings on the news page.

End of October 2026 Update





There are a number of taxes applicable to the state of Kentucky, which includes sales tax and six income brackets for personal income taxation.  Tax returns are due on April 15.

Kentucky state sales tax – 6%, (food, prescription drugs, utilities and medical supplies exempt)

Kentucky state personal income tax 

Six income brackets for single filings

📝 See Also

2% - first $3,000 of taxable income

3% - $3,000 - $4,000

4% - $4,000 - $5,000

5% - $5,000 - $8000

5.8% - $8,000 - $75,000

6% - $75,000+

 


Kentucky state excise taxes

Kentucky State Tax

Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.

$.60 per package of 20 cigarettes, $.19 per unit of snuff

15% taxation on other tobacco products

$1.92 tax per gallon of liquor, no less than 12 cents on half pint retial containers

$2.50 per 31 gallon barrel of beer

$.50 per gallon of wine

Motor vehicle usage tax – 6% of selling price

$.21 a gallon on gasoline , $.18 on diesel

 


 


Kentucky State marijuana/drug taxes

$1,000 for each marijuana plant, $3.50 per gram of processed marijuana

$200 for each gram of cocaine

Tax payments of this nature are made anonymously and signified by adding a tax stamp to the product.  This is a legally questionable tax due to the implications for self-incrimination for all that buy these stamps.


 


 


Kentucky inheritance tax 

Kentucky would only impose an estate tax if the federal estate tax were phased out.

 


Kentucky payroll taxes

State Disability Insurance – none

State Unemployment Insurance - 1% to 10%, wage base is $8,000.  Employer contribution is 10% for new construction employers, 2.7% for all others.


 


 


Kentucky state property tax

Property must be assessed by Jan 1, annually and listed by March 15.  The Kentucky State property tax is 13.6 cents per $100 of assessed value.  This tax goes directly into the state’s general fund.

 


Exemptions

Pension income exclusion stands at $41,110 for government pensions and US Railroad Retirement Board benefits.  Not adjusted for inflation.

Low income tax credit - $10,830 for single person, $14,570 family of two, up to $22,050 for a family of four.

Qualified persons may be exempt for property under $34k under the homestead exemption.  This generally applies to seniors over the age of 65, individuals that are totally disabled and disabled members and veterans of the armed forces.  All others under 65 must file applications annually.

 


Corporate income tax

4 percent of the first $50,000 of taxable income, 5 percent of the next $50,000 of taxable income, 6 percent of the taxable income over $100,000.

 


Misc

Social Security, railroad retirement are not taxed under Kentucky law.

Medical expenses that exceed 7.5% of income can be deducted.

Military personnel receiving their only income from the military pay will be exempt from taxes in Kentucky.  They will not need to file tax returns.