Kentucky State Income Tax in 2025: A Guide

Kentucky keeps things straightforward with a flat state income tax rate of 4% for the 2024 tax year (the taxes you’ll file in 2025). This single-rate system simplifies tax filing, as everyone who must file a Kentucky state return pays the same percentage no matter how much they earn. This predictability for Kentucky taxpayers or those earning income there sets it apart from states like California, which uses tiered tax brackets.  

Kentucky is working toward gradually lowering its individual income tax rate, with the long-term goal of eliminating it entirely. In tax year 2026, the rate will decrease to 3.5%. 

With Kentucky’s consistent tax approach, managing your state taxes is simpler than ever. Here’s a closer look at what to expect when filing your Kentucky state income taxes in 2025. 

*Note you are still responsible for federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only.

Who has to file state income tax in Kentucky?

Your Kentucky state income tax depends on things like your residency status, family size,  modified gross income (MGI), Kentucky adjusted gross income, and self-employment income. 

To determine your MGI, use whichever of the following is greater: 

• Your federal adjusted gross income: Your gross income after federal deductions and adjusted to include interest income from non-Kentucky municipal bonds, as well as lump-sum pension distributions not already included.
• Your Kentucky adjusted gross income: Kentucky adjusted gross income is adjusted to include lump-sum distributions not included in federal adjusted gross income.

Charts A and B in the following sections outline the specific income levels for filing requirements. Generally, you must file if your MGI exceeds the amount in Chart A and your Kentucky adjusted gross income surpasses the amount in Chart B. 

However, if you have self-employment income, you must file a Kentucky state income tax return regardless of the amount in Chart B if your gross receipts from self-employment are greater than the amounts for your family size in Chart A. 

Kentucky doesn’t require that married couples use the same filing status (joint or separate) as they use on their federal return. Most married taxpayers will pay less in state tax filing either  Married Filing Separately on a combined return (for full-year residents only) or Married Filing Separately (on separate returns).

Chart A: Family size and MGI

Chart A
Family size	Modified gross income (MGI) must be more than:
1	$15,060
2	$20,440
3	$25,820
4 or more	$31,200

Chart B: Kentucky adjusted gross income

If your income exceeds the amounts listed in Chart A and Chart B below, you likely need to file Kentucky state income taxes. 

Chart B
If your filing status is:	Your Kentucky AGI is more than:
Single: younger than 65	$3,160
Single: 65 or older or blind	$4,160
Single: 65 or older and blind	$5,160
Taxpayer and spouse: both younger than 65	$3,160
Taxpayer and spouse: one 65 or older	$4,160
Taxpayer and spouse: both 65 or older	$5,160

Source: Kentucky Department of Revenue

Other income tax considerations in Kentucky

Along with standard wages, Kentucky taxes specific types of income differently. Here’s a breakdown of how these are treated: 

• Retirement and pension income tax: The first $31,110 of retirement income is exempt. Amounts above this are taxed as individual income. 
• Investment income tax: Capital gains are taxed as individual income. 
• Social Security income tax: Social Security benefits are fully exempt from Kentucky income tax. 
• Military income tax: Active-duty pay is fully exempt from Kentucky income tax. Military retirement pay is partially exempt if retired after December 31, 1997 and fully exempt if retired before January 1, 1998.

Common Kentucky state tax credits

Tax deductions and credits can reduce the amount of income tax you owe. Deductions lower your taxable income, while credits provide a dollar-for-dollar reduction in your tax bill. Below are common Kentucky-specific tax credits that may help you save on your state taxes. 

Tax credit	Description	Amount
Child and Dependent Care Credit	Designed to offset the financial burden of child or dependent care expenses.	20% of the federal child care credit.
Education Tuition Tax Credit	Helps taxpayers cover tuition and other qualified higher education expenses.	Up to 25% of federal American Opportunity Credit (maximum allowed up to $625 per student) and the Lifetime Learning Credit (maximum allowed of $500 per return).
Family Size Tax Credit	Offers tax relief for individuals and families struggling with poverty.	Varies based on MGI and family size. The 2024 threshold amount is:$15,060 for a family size of one$20,440 for a family of two$25,820 for a family of three$31,200 for a family of four or more.
Personal and Dependency Credits	Reduces taxes for any person 65 or older, blind, or in the Kentucky National Guard.	$40 per qualifying individual who is 65 or older. Individuals who are 65 or older and blind qualify for a $80 tax credit. Kentucky National Guard members can receive a credit of $20.

Note: Visit the Kentucky Department of Revenue website for a full list of tax credits in Kentucky.

How to file Kentucky state income tax

When it’s time to file your Kentucky state income taxes, having the right tools and support makes all the difference. TurboTax simplifies the process with easy-to-follow steps that ensure you understand Kentucky’s tax rules and claim deductions and credits available to you. Whether you’re a resident, part-year resident, or nonresident earning income in Kentucky, we’ll help you maximize your refund. 

If you’re looking for professional help, TurboTax connects you with local tax experts in Kentucky who can provide personalized advice or even handle the entire filing process for you. Start your Kentucky tax return today with TurboTax.