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Kentucky State Taxes: All You Need To Know
All states in the USA levy local taxes to pay for local services. The level of taxation and the details of exemptions and refunds vary from state to state. It is important to be aware of what the tax law is in the state where you are resident, do business, work, or are just visiting.
Income tax is a progressive tax which means that as your income increases so you pay more tax. It is the basic form of taxation in Kentucky.
In the state of Kentucky the rate of income tax ranges from 2% to 6%. There are six income brackets. The lowest rate is 2% on the first $3000 of taxable income. It then increases to 3% on the next $1000 of taxable income and to 4% on incomes between $4000 to $5000. On taxable income between $5,001 and $8,000 tax is paid at 5% and at 5.8% on incomes between $8,001 and $75,000. Above that level tax is payable at 6%.
If you work within the state you will be liable to state income tax even if you do not live in Kentucky.
These income tax brackets apply whether the tax is filed by a couple or an individual. Income tax forms must be filed by April 15 every year. This is true for all states in the USA. There are however extensions and adjustments available to this due date.
Former state, federal local government and US railroad employees who have a pension have a tax exempt allowance up to $41,110. This sum will vary and should be checked on the website of the relevant pension board website.
Tax credits based on the federal poverty level are available for families. Individuals on low incomes may also qualify. One person on an income of less than 133% of the threshold income of $9,800 qualifies for a tax credit. For a family of two the threshold is $13,200, for a family of three it is $16,600, and for a family of four or more it is $20,000.
Tax is levied on personal and real property in Kentucky. The rates vary according to the type of property. It is quite a complex system. You should check the rate for your property on the official website.
Unlike some states, Kentucky has an inheritance tax. There is also an estate tax which is determined by federal tax law. Intangible property, such as bonds,interests, annuities, trusts, money market accounts, loans to stockholders and notes, is liable to taxation in the State of Kentucky.
There is a diffent due date for tax forms relating to property in the State of Kentucky. They must be filed between January 1 and May 15 annually rather than April 15 as for income tax.
Sales tax applies to all goods bought in the state of Kentucky and to goods bought outside the state but used or consumed within the state. It is levied at the rate of 6% in Kentucky.