Kentucky Sales and Use Tax Changes for 2023 (2024)

FAQs

What are the tax changes for 2023 in Kentucky? ›

House Bill 1 (“HB 1”) reduced the individual income tax from 5% to 4.5% for the 2023 tax year and 4% for tax years beginning in 2024. This is part of a concerted effort to eliminate Kentucky's individual income tax.

Effective January 1, 2023, the Kentucky sales and use tax will apply to over 30 additional service categories. Businesses that provide these services are required to collect the 6% sales tax from their customers, unless otherwise noted. These changes are the result of House Bill 8 that passed in 2022.

Tax-exempt customers

Some customers are exempt from paying sales tax under Kentucky law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale. Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.

The minimum combined 2024 sales tax rate for Louisville, Kentucky is 6%. This is the total of state, county and city sales tax rates. The Kentucky sales tax rate is currently 6%.

After an inflation adjustment, the 2023 standard deduction increases to $13,850 for single filers and married couples filing separately and to $20,800 for single heads of household, who are generally unmarried with one or more dependents. For married couples filing jointly, the standard deduction rises to $27,700.

Kentucky law lowers personal income tax rates for 2023 and 2024 and removes triggers for future rate cuts. On February 17, 2023, Kentucky Governor Andy Beshear signed into law H.B.1, which lowers the state personal income tax rate to 4.5% retroactive to January 1, 2023, and to 4.0% effective January 1, 2024.

Kentucky's sales and use tax rate is six percent (6%). Kentucky does not have additional sales taxes imposed by a city or county. 5.) I am a Kentucky retailer and I sell to an out-of-state retailer who is not registered in Kentucky.

Through the executive order, the Governor froze an increase in motor vehicle property taxes by mandating car assessments for January 2022 and 2023 to remain the same as were assessed in January 2021.

Kentucky – Food and food ingredients are exempt from sales tax. This exemption does not include candy, tobacco, alcoholic beverages, soft drinks, dietary supplements, prepared food or any food sold through vending machines.

All Social Security retirement benefits are exempt from the Kentucky state income tax. When you calculate your adjusted gross income (AGI) for Kentucky income taxes, you will be able to subtract all income that you received as Social Security and Railroad Retirement Board benefits.

Who is exempt from property taxes in Kentucky? ›

Homestead Exemption​

Section 170 of the Kentucky Constitution also authorizes a homestead exemption for property owners who are at least 65 years of age or who have been determined to be totally disabled and are receiving payments pursuant to their disability. Find out more about the homestead exemption.

Kentucky sales tax will be charged for utility services furnished to any location that is not your place of domicile, even if it was formally classified as residential. The 6% sales tax applies to the sale of water and sewer, electricity, and heating gas and fuels used or delivered.

For tax year 2024, the standard deduction for married couples filing jointly rises to $29,200, an increase of $1,500 from 2023. For single taxpayers, the standard deduction rose to $14,600, a $750 increase from the previous year.

Yes, Kentucky is considered a good state to live in! Most of Kentucky's cities have affordable housing with an overall cost of living that's below the national average. Plus, the state offers a lot of variety—you can choose between big cities, rural areas and traditional college towns.

(September 21, 2022) Each year, the Kentucky Department of Revenue (DOR) calculates the individual standard deduction in accordance with KRS 141.081. After adjusting for inflation, the standard deduction for 2023 is $2,980, an increase of $210.

You are limited to $31,110 in excludable retirement.

Kentucky is tax-friendly toward retirees. Social Security income is not taxed. Withdrawals from retirement accounts are partially taxed. Wages are taxed at normal rates, and your marginal state tax rate is 0.0%.

For 2023, the additional standard deduction amounts for taxpayers who are 65 and older or blind are: $1,850 for Single or Head of Household (increase of $100) $1,500 for married taxpayers or Qualifying Surviving Spouse (increase of $100)