Taxes in Lexington
Kentucky levies a real, flat state income tax cut to 3.5% effective January 1, 2026 -- disclosed here as CONTINGENT on budget triggers and legislative reenactment each cycle, not a guaranteed permanent floor -- alongside a genuinely simple flat 6% sales tax with NO local-option city or county add-ons anywhere in the Commonwealth.
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Learn moreKentucky's Real, Flat State Income Tax -- Cut to 3.5% for 2026
Kentucky's state income tax is a real, flat individual income tax, cut from 5% (2018) to 4.5% (2023) to 4% (2024-2025) to a real, dated 3.5% effective January 1, 2026, via 2022's House Bill 8 phase-down mechanism, per this build's own Kentucky market manifest research context.
A Real, Disclosed Contingency -- Not a Guaranteed Permanent Floor
This record discloses HB 8's own mechanism honestly: each further cut is CONTINGENT on Kentucky meeting real budget-reserve/revenue-growth triggers AND requires the state legislature to reenact it each cycle -- not an automatic glide path. Movers should not assume 3.5% is a permanently locked-in rate going forward.
A Real, Genuine Sales-Tax Simplification -- No Local Add-Ons Anywhere in Kentucky
Kentucky's sales tax runs a real, flat 6% statewide with NO local-option city or county sales taxes anywhere in the Commonwealth -- the state rate is the whole story, a real point of contrast with most other states covered in this project. HB 8 also broadened the sales-tax base to newly cover a real, dated list of additional services starting 2023.
Fayette County's Own Comparatively Moderate Property Tax
As detailed in full on the property-taxes topic page, Fayette County's own effective property tax rate ran approximately 0.89% -- modestly above Kentucky's own statewide range of approximately 0.80%-0.85%, though a separately-cited source ran meaningfully higher at 1.24%, a real, disclosed cross-source spread.
Key takeaways
- Kentucky's flat state income tax was cut to a real 3.5% effective January 1, 2026, via HB 8's phase-down mechanism.
- That cut is CONTINGENT on the state meeting budget-reserve/revenue-growth triggers and legislative reenactment each cycle -- not a guaranteed permanent floor.
- Kentucky's sales tax runs a flat 6% statewide with NO local-option city or county add-ons anywhere in the Commonwealth.
- Fayette County's own effective property tax rate (approximately 0.89%) sits modestly above Kentucky's own statewide range.
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