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Kentucky's Tax Structure


As an existing or prospective business owner, understanding your business tax situation is a necessary aspect of running your business. Business taxes help to support government programs at the local, state, and federal level. As such, a business owner should stay aware of pending legislation at those levels that may impact their business. Sales and use taxes, payroll taxes and withholding taxes, property taxes, and corporation and income taxes are just some of the types of taxes that you may encounter as a business owner.

Kentucky has modernized its tax code to create a more proactive, business friendly taxation model. As a result, there were several major changes to the tax code since 2005. Major changes affecting Kentucky's business climate include:

  • Corporate license tax was eliminated
  • Highest corporate income tax rate is now 6%
  • The state property tax rate on qualifying voluntary environmental remediation property is $0.015 per $100 and the property is exempt from local property taxes for 3 years
  • An income tax credit up to $150,000 per taxpayer for expenditures to characterize the extent of contamination or remediate contamination on qualifying voluntary environmental remediation property
  • Intangible property is exempted from state and local taxation, except for financial institutions and life insurance companies
  • Biodiesel fuel income tax credit of $1 per biodiesel gallon produced or blended in this state
  • Biotechnology products held in inventory are exempt from local property tax
  • "Major Recycling Project" program for qualifying projects with an investment of more than $10 million in recycling or composting equipment

The Kentucky Department of Revenue, administers the tax laws and collects tax revenue for the state and can provide more detailed information. The Internal Revenue Service can also provide assistance regarding business tax issues. The services of an accountant should also be considered.

For additional information or assistance, please email us at econdev@ky.gov or call 800-626-2930.

Additional Resources:

Major Business Taxes in Kentucky in PDF version*

Major Personal Taxes in Kentucky in PDF version*

State Indices of Relative Business Costs - PDF version*

Kentucky Business Incentives and Financial Programs

Downloadable Kentucky Business Tax Forms – Dept. of Revenue

IRS Information on Taxes for Small Businesses and Self-Employed Individuals

Apply For a Federal Employer Tax I.D. Number Online

Federal Tax Information for Small Businesses Including Forms and Publications

SBA Information on Payroll Taxes

SBA Online Training Courses on Federal Taxes

 


Contact Us

Email:
econdev@ky.gov

Address::
Kentucky Cabinet for
Economic Development
Old Capitol Annex
300 West Broadway
Frankfort, KY 40601

Phone:
800-626-2930
502-564-7140