Tax & Incentives
State & Local Taxes
A state sales tax is levied at the rate of 6% on the purchase or lease price of taxable goods and on utility services. Local sales taxes are not levied in Kentucky.
The Kentucky Constitution requires the state to tax all classes of taxable property, and state statutes allow local jurisdictions to tax only a few classes. All locally taxed property is subject to county taxes and school district taxes (either a county school district or an independent school district). Property located inside city limits may also be subject to city property taxes. Property assessments in Kentucky are at 100% fair cash value. Special local taxing jurisdictions (fire protection districts, watershed districts, and sanitation districts) levy taxes within their operating areas (usually a small portion of the community or county).
State Property Tax Rates Per $100 Valuation, 2015
| Selected Class of Property | State Rate | Local Taxation Permitted |
|---|---|---|
| Real Estate | $0.12 | Yes |
| Manufacturing Machinery | $0.15 | No |
| Pollution Control Equipment | $0.15 | No |
| Raw Materials | $0.05 | No |
| Goods in Process | $0.05 | No |
| Finished Goods | $0.05 | Yes |
| Goods-In-Transit | Exempt | Limited |
| Motor Vehicles | $0.45 | Yes |
| Other Tangible Personal Property | $0.45 | Yes |
Source: Kentucky Department of Revenue.
Local Property Tax Rates Per $100 Valuation, 2015
| Taxing Jurisdiction | Real Estate | Tangibles | Motor Vehicles |
|---|---|---|---|
| Berea Independent Schools | $0.89 | $0.89 | $0.59 |
| Madison County | $0.25 | $0.32 | $0.26 |
| Madison County Schools | $0.62 | $0.62 | $0.56 |
| Richmond | $0.14 | $0.14 | $0.29 |
Source: Kentucky Department of Revenue.
Local Occupational License Taxes, 2015
Cities, counties, and school districts may levy an occupational license tax on the net profits of businesses and/or on the salaries and wages of employees earned in the jurisdiction. Rates can vary between the two types of occupational license taxes. Occupational license taxes may be levied on businesses as either a flat rate schedule or as a percentage of apportioned net profits or gross receipts. Where both the city and county levy an occupational license tax, a credit may be given, at the option of the local governments, for the amount paid to the city against the occupational license tax of the county. (Consult local jurisdictions for further details.)
| Taxing Jurisdiction | Tax Rate on Salaries / Wages | Tax Rate on Net Profits / Receipts |
|---|---|---|
| Berea Independent Schools | No tax | No tax |
| Madison | 1.00% | 1% (on net profits) |
| Richmond | 2% (on net profits) | 2% (or net profits) |
Source: Kentucky Society of Certified Public Accountants.
Major State Incentive Programs
- Bluegrass State Skills Corporation (BSSC) – Learn more about the Grant-in-Aid and Tax Credit programs for workforce training offered through BSSC.
- Kentucky Business Incentives and Financial Programs – Click on this link to learn more about the various tax incentive programs offered by the Kentucky Cabinet for Economic Development.
Source: Kentucky Cabinet for Economic Development.
The above data was updated in July 2016. For the most up-to-date information, check ThinkKentucky.com at Taxes and Incentives.