Kentucky Income Tax Rate to Decrease in 2026

Kentucky’s flat income tax rate will decrease to 3.5% in 2026, the state revenue department said Oct. 15 when releasing its 2026 withholding formula.

The formula uses the tax rate of 3.5%, which decreased from 4%, and a standard deduction of $3,360 annually, up from $3,270.

The department said in a note included with the formula that employees working for multiple employers in 2026 may have to request an extra $117.60 be withheld, which is the standard deduction multiplied by the 3.5% tax rate, because individuals can only claim the standard deduction once.