Compare state tax rates and rules — on income, ordinary purchases, gas, sin products, property, and more — across the U.S. Go to the Kiplinger Tax Map Kentucky Add to State Compare List | View List View State Compare List (0) selected | Compare up to 5 The Bottom Line Mixed Tax Picture Kentucky changed its tax structure substantially in 2018, moving to a 5% flat tax (to which localities can add). Deductions for health insurance premiums, long-term care insurance coverage, and medical expenses were eliminated. More items are now subject to the state’s 6% sales tax, too, including club fees, pet care services, and landscaping services.However, the Bluegrass State still prevents localities from adding to that sales tax, and and the property tax burden is light. Sales Tax State levy of 6%. Income Tax Range Kentucky has a flat income tax rate of 5%. Certain counties, cities and other local government entities (such as school boards) can levy an additional occupational license payroll tax on wages earned by employees working within its boundaries. According to the Tax Foundation, the average local occupational license payroll tax rate is 2.08%.Effective tax rate: 5% for single filers, 7.02% for joint filers. Motor Fuel Taxes Gasoline: $0.2600 per gallon. Diesel: $0.2300 per gallon. Property Taxes In Kentucky, residents pay an average $925 in taxes per $100,000 of assessed home value. Vehicle Taxes A 6% tax is collected at registration. Additionally, the state vehicle property tax rate is $0.45 per $100 of car value; counties and other localities impose an additional levy. Sin Taxes Cigarettes: $1.10 per packSnuff: $0.19 per unit of 1.5 ouncesChewing tobacco: Approximately $0.04 per ounceOther tobacco products: 15% of wholesale priceBeer: $0.85 per gallonWine: $3.47 per gallonLiquor: $7.86 per gallon Taxes On Wireless Service 10.92% Inheritance and Estate Taxes Kentucky has an inheritance tax, but all Class A beneficiaries (spouse, parent, child, grandchild, brother and sister) are exempt. But nieces, nephews, daughters-in-law, sons-in-law, aunts, uncles and great-grandchildren are taxed at rates ranging from 4% to 16%, depending on the value of the property inherited (the first $1,000 of property is exempt). All other heirs are taxed at rates ranging from 6% to 16% (their exemption is only for the first $500 of property). About our methodology