Kentucky Payroll · Flat 4% State + Local Occupational Tax · IRS Publication 15-T
Kentucky Paycheck Calculator 2025
Estimate your Kentucky take-home pay for hourly or salaried work. Kentucky withholds a flat 4% state income tax after a single $3,270 standard deduction, and cities like Louisville and Lexington add a local occupational tax on gross wages. No employee unemployment tax. Uses 2025 IRS Publication 15-T rates.
Pay Details
Used for the federal Publication 15-T withholding tables. Kentucky's flat 4% state tax does not use filing status.
Check this on Form W-4 if you hold two jobs or your spouse also works. It switches to the higher federal Step 2 withholding schedule.
Pre-Tax Deductions (Optional)
Traditional elective deferral. Lowers federal and Kentucky state tax, but not the local occupational tax.
Cafeteria-plan medical premiums. Lowers federal, Kentucky, FICA, and local occupational-tax wages.
Federal W-4 Adjustments (Optional)
Annual federal dependent credit total (e.g. $2,000 per child under 17)
Federal Step 4c additional withholding per paycheck
Kentucky Withholding (Form K-4)
Choose exempt only if you filed a K-4 claiming exemption, for example as a full-year resident of a reciprocal state (IL, IN, MI, OH, VA, WV, WI).
The $3,270 standard deduction is built into each job's withholding. With more than one job, Kentucky suggests withholding an extra $130.80 a year so it is not double-counted.
Optional additional Kentucky amount requested on Form K-4.
Local Occupational Tax (City / County)
Most Kentucky cities and counties levy an occupational license tax on wages earned in the jurisdiction, charged on gross wages. Louisville's 2.2% resident rate is 1.45% for nonresidents of the Jefferson County school district. Confirm your exact local rate; some smaller cities cap wages at the Social Security base.
Kentucky state tax is a flat 4% for 2025 applied after the single $3,270 standard deduction. Local occupational taxes (Louisville 2.2%, Lexington 2.25%, and others) apply to gross wages. Kentucky has no employee-paid unemployment tax and no state disability deduction.
Enter your pay details and click Calculate to see your take-home pay breakdown.
Want the full Kentucky payroll picture, including the local occupational taxes, employer unemployment tax, Form K-4, reciprocity, and filing frequencies? Read the Kentucky Payroll Taxes guide.
Kentucky Payroll Taxes Guide →Short Answer
This Kentucky paycheck calculator estimates net take-home pay after federal income tax withholding, Social Security (6.2%), Medicare (1.45%), Kentucky income tax withheld at a flat 4% (2025) after the single $3,270 standard deduction, and the local occupational tax when you work in a city or county that levies one. For a single filer earning $65,000 per year paid biweekly, with no local tax, gross pay is $2,500.00 per period, the Kentucky state line is about $94.97, and net take-home is approximately $1,986.32. Working in Louisville Metro adds a 2.2% occupational tax of $55.00, dropping net to $1,931.32. A traditional 401(k) deferral lowers the Kentucky state tax but not the local occupational tax, which is charged on gross wages. Kentucky has no employee unemployment contribution.
Key Takeaways
- Kentucky withholds a flat 4% state income tax for 2025 (dropping to 3.5% for 2026), with no filing-status brackets and no per-allowance amounts.
- The Kentucky standard deduction is a single $3,270 for 2025 ($3,360 for 2026), applied to every employee regardless of filing status. It is the only subtraction before the flat rate.
- Most Kentucky cities and counties levy a local occupational license tax on gross wages. Louisville Metro charges 2.2% (1.45% for school-district nonresidents), Lexington-Fayette 2.25%, and rates statewide range from about 0.5% to 2.5%.
- A traditional 401(k) deferral cuts the state tax but NOT the local occupational tax, because Kentucky starts from federal income while the occupational tax is charged on gross wages. A $7,800 deferral saves about $312 of state tax and $0 of local tax.
- Form K-4 has no allowance count. It is used to claim exemption (including reciprocity with IL, IN, MI, OH, VA, WV, WI) or to request additional withholding. Reciprocity waives only the state tax, not the local tax.
- Kentucky has no employee-paid unemployment tax and no state disability deduction. Unemployment insurance is funded entirely by employers.
- With more than one job, the $3,270 standard deduction is applied on each, so Kentucky suggests withholding an extra $130.80 a year.
2025 Kentucky Paycheck Tax Quick Reference
| Tax | Rate | Wage Base / Threshold | Notes |
|---|---|---|---|
| Federal Income Tax | 10%–37% | No cap | Graduated brackets. Based on W-4 filing status and Publication 15-T percentage method tables. |
| Social Security (OASDI) | 6.2% employee | $176,100 (2025) | Withholding stops at wage base. Employer matches 6.2%. |
| Medicare (HI) | 1.45% employee | No limit | Employer matches 1.45%. |
| Additional Medicare Tax | 0.9% | $200,000 single/HOH; $250,000 MFJ; $125,000 MFS | Employee only. Employer withholds once individual wages exceed $200,000. |
| Kentucky Income Tax | 4% flat (2025) | No cap | Flat rate applied after the $3,270 standard deduction. Falls to 3.5% for 2026. |
| Local Occupational Tax | ~0.5% to 2.5% | Gross wages, usually no cap | Louisville 2.2%, Lexington 2.25%. Levied where the work is performed. Not reduced by 401(k). |
| KY Standard Deduction | $3,270 (2025) | Reduces taxable wages | Single amount for every filing status. $3,360 for 2026. |
| KY Unemployment (employee) | None | — | Kentucky UI is employer-funded only. No employee deduction. |
How This Calculator Works
Hourly Mode: Gross Pay Per Period
Gross pay per period equals the hourly rate multiplied by hours worked per week, then scaled to the pay period. For biweekly pay: hourly rate × hours per week × 2. For weekly: hourly rate × hours per week. For semi-monthly and monthly: hourly rate × hours per week × (52 ÷ periods per year).
Salary Mode: Gross Pay Per Period
Gross pay per period equals annual salary divided by the number of pay periods per year. Weekly: ÷ 52. Biweekly: ÷ 26. Semi-monthly: ÷ 24. Monthly: ÷ 12.
Which Wages Kentucky Taxes
Kentucky income tax begins with your federal adjusted gross income, so the wages Kentucky withholds on are the same wages that are subject to federal income tax withholding. The local occupational tax works differently: it is charged on gross wages where the work is performed, so the two Kentucky lines do not share a base:
- Federal taxable wages = gross − Section 125 medical − 401(k) elective deferral.
- Kentucky state base = the same federal base, then reduced by the $3,270 standard deduction. The flat 4% rate applies to this number.
- Local occupational-tax base = gross wages (Medicare wages). The 401(k) deferral does not reduce it, though a Section 125 medical premium does.
- FICA wages (Social Security, Medicare) = gross − Section 125 medical. The 401(k) deferral does not reduce FICA.
Because Kentucky starts from federal income but the local occupational tax rides on gross wages, a traditional deferral lowers the federal line and the state line, yet the local line stays exactly the same. That mirrors the Kansas City and St. Louis earnings tax rather than a shared-base local tax like Indiana's county tax.
Social Security Tax
Social Security is 6.2% of annualized FICA wages up to the $176,100 wage base for 2025. The per-period amount is the annualized Social Security tax divided by pay periods. This calculator does not track year-to-date cumulative wages, so for workers approaching the wage base, actual withholding will stop mid-year once the limit is reached.
Medicare Tax
Standard Medicare is 1.45% on all FICA wages. The calculator adds the 0.9% Additional Medicare Tax on annualized FICA wages above $200,000, matching the employer withholding rule in IRS Topic 560: withholding starts once wages exceed $200,000 in a calendar year regardless of filing status. Final liability on Form 8959 uses filing-status thresholds ($200,000 single/HOH, $250,000 MFJ, $125,000 MFS).
Federal Income Tax Withholding
The calculator follows IRS Publication 15-T Worksheet 1A (Percentage Method for Automated Payroll Systems) for 2025:
- Annualize the per-period gross pay (multiply by pay periods per year).
- Subtract annualized Section 125 medical premiums and 401(k) elective deferrals to get federal taxable wages.
- Add Step 4a other income; subtract Step 4b additional deductions.
- Subtract the line 1g allowance: $12,900 for married filing jointly or $8,600 otherwise. If the W-4 Step 2 box is checked, subtract $0 instead. The result is the Adjusted Annual Wage Amount.
- Apply the Annual Percentage Method table for the W-4 filing status - the STANDARD schedule, or the Step 2 Checkbox schedule when the Step 2 box is checked - then divide the tentative annual withholding by pay periods.
- Subtract Step 3 dependent credits divided by pay periods, then add Step 4c extra withholding.
Kentucky State Income Tax (Flat Method)
Kentucky follows the flat computer formula in the Kentucky Department of Revenue's annual Withholding Tax Formula. The employer annualizes wages, subtracts the single standard deduction, applies the flat rate, then divides across pay periods:
taxable = annual wages − $3,270 standard deduction
annual state tax = taxable × 4% (2025)
per period = annual state tax ÷ pay periods
There are no filing-status brackets and no per-allowance amounts. Every Kentucky employee gets the same $3,270 deduction and the same 4% rate for 2025. The Kentucky Department of Revenue's own biweekly example uses $1,500 of wages: annual wages $39,000, minus $3,270 gives $35,730, times 4% is $1,429.20 a year, or $54.97 biweekly, which this calculator reproduces to the cent. For 2026 the rate falls to 3.5% and the standard deduction rises to $3,360.
Kentucky Local Occupational Taxes
Kentucky is one of the heaviest local-tax states in the country: most of its 120 counties and hundreds of cities levy an occupational license tax (also called a license fee or payroll tax) on wages earned in the jurisdiction. Louisville Metro (Jefferson County) charges 2.2% on resident employees, Lexington-Fayette charges 2.25%, and other cities range from about 0.5% to 2.5%. Because these taxes are charged on gross wages where the work is performed, a 401(k) deferral does not lower them, though a Section 125 cafeteria-plan premium does because it reduces Medicare wages. Select your work city above and the calculator adds the local line; some smaller cities cap the wage base at the Social Security limit, so confirm your exact rate.
No Kentucky Employee Unemployment Tax
Kentucky collects no employee unemployment contribution; the entire cost of Kentucky unemployment insurance falls on employers through the Office of Unemployment Insurance. Kentucky also has no state disability insurance deduction and no paid-family-leave payroll deduction. That leaves a Kentucky paycheck with federal taxes, the flat state tax, the optional local occupational tax, and FICA.
Kentucky 2025 and 2026 State Income Tax Withholding
Kentucky Department of Revenue Withholding Tax Formula. The flat rate applies to Kentucky taxable income, which is annual wages minus the single standard deduction. Kentucky steps its flat rate down through revenue-triggered cuts.
| Tax year | Flat rate | Standard deduction | Multiple-job extra |
|---|---|---|---|
| 2024 | 4.0% | $3,160 | $126.40 |
| 2025 | 4.0% | $3,270 | $130.80 |
| 2026 | 3.5% | $3,360 | $117.60 |
Real-World Paycheck Scenarios
Scenario 1: Salaried Single Filer With No Local Tax
Alex earns $65,000 per year in Elizabethtown, paid biweekly, filing single with a standard federal W-4, and works in a county with no occupational tax. Alex has no 401(k) deferral and no cafeteria-plan premiums. The biweekly gross is $65,000 ÷ 26 = $2,500.00.
Kentucky detail: Alex's annual wages of $65,000 are reduced by the $3,270 standard deduction to $61,730, the Kentucky taxable base. At the flat 4% rate the annual Kentucky tax is $2,469.20, which divided by 26 is $94.97 per period. The effective Kentucky rate is about 3.8% of gross, a little under the 4% headline because the deduction is subtracted first. If Alex took the same job in Louisville Metro, a 2.2% occupational tax of $55.00 per period (2.2% × $2,500) would drop net pay to $1,931.32; in Lexington-Fayette the 2.25% tax of $56.25 would drop it to $1,930.07.
Scenario 2: The 401(k) Deferral That Cuts State Tax but Not the Local Tax
Jordan earns $85,000 per year in Louisville, paid biweekly, filing single, and defers $300 per period to a traditional 401(k) ($7,800 per year). The deferral lowers the federal and Kentucky state wages, but the 2.2% Louisville occupational tax stays on the full gross.
Jordan's Kentucky base is the $77,200 federal wages minus the $3,270 standard deduction, or $73,930, so the annual state tax is 4% × $73,930 = $2,957.20, or $113.74 per period. Without the deferral the Kentucky base would be $81,730 and the state tax $125.74 per period, so the $7,800 deferral saves about $312 of Kentucky state tax a year (4% × $7,800). The Louisville occupational tax is $71.92 either way, because it is 2.2% of the full $3,269.23 gross and a 401(k) deferral does not touch it. Social Security and Medicare also stay on the full $85,000. See the Pension and Annuity Income Tax Guide for how distributions are treated at the back end.
Practitioner Insight
The Kentucky item that surprises people is not the state rate, which at a flat 4% (soon 3.5%) is one of the simpler state calculations in the country. It is the local occupational tax. Kentucky lets counties, cities, and even school districts stack license fees on wages, and a worker in Louisville or Lexington pays a local rate that is often larger than their effective state rate. Because the local tax is levied where the work is performed rather than where you live, a Louisville resident who takes a job across the river or in a no-tax county can see the 2.2% line disappear, while a remote worker who moves out of the metro but keeps a Louisville work location may still owe it. Employers do not always get the work-location sourcing right, and we see both over-withholding and under-withholding on the local line.
The second recurring item is the 401(k) asymmetry. Clients who bump their deferral see the state line drop by 4 cents on the dollar but the occupational-tax line hold steady, because that tax rides on gross wages. It is a small surprise, but it changes the real value of a deferral for a Louisville or Lexington worker versus someone in a county with no local tax.
Third is reciprocity. Kentucky has agreements with seven neighboring states, so an Indiana or Ohio resident who works in Kentucky files a K-4 to stop Kentucky state withholding. What trips them up is that the local occupational tax is not covered by reciprocity: an Ohio resident working in Covington still owes the Covington occupational tax on those wages even though no Kentucky state income tax is withheld.
When This Calculator Gives a Less Accurate Estimate
- Your exact local rate: The dropdown lists a handful of major jurisdictions, but Kentucky has hundreds of local occupational taxes, and a county tax can stack on top of a city tax. Confirm the combined rate for your exact work location, and note some smaller cities cap wages at the Social Security base.
- Louisville nonresidents: The 2.2% Louisville rate is the resident rate. A nonresident of the Jefferson County school district pays 1.45% instead, because the 0.75% school-board portion does not apply. Select the closest match and adjust if needed.
- Reciprocity: If you are a full-year resident of Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, or Wisconsin and filed the reciprocity form, choose exempt so no Kentucky state tax is withheld. The local occupational tax still applies.
- Very low earners: Once the $3,270 standard deduction exceeds annual wages, the Kentucky state line is zero. The calculator floors it at zero, which is correct.
- Roth 401(k) contributions: A Roth deferral is a post-tax deduction. It reduces neither federal nor Kentucky taxable wages. Do not enter it in the 401(k) field, which models traditional pre-tax deferrals only.
- Year-to-date tracking and variable hours: The calculator annualizes a single consistent pay period. Social Security stops mid-year at the wage base, overtime and seasonal hours vary, and bonuses use supplemental federal withholding rules.
Frequently Asked Questions
What is the Kentucky state income tax withholding method for 2025?
Kentucky withholds state income tax at a single flat rate. For 2025 the employer annualizes wages, subtracts the Kentucky standard deduction of $3,270, then applies the flat 4% rate to the remainder to get the annual Kentucky tax and divides it across the pay periods. There are no filing-status brackets and no per-allowance amounts; every employee gets the same $3,270 deduction and the same 4% rate. For 2026 the rate falls to 3.5% and the standard deduction rises to $3,360. Source: Kentucky Department of Revenue 2025 and 2026 Withholding Tax Formula.
Do Louisville and Lexington have a local payroll tax?
Yes. Most Kentucky cities and counties levy a local occupational license tax on wages earned in the jurisdiction. Louisville Metro (Jefferson County) charges 2.2% on resident employees, and Lexington-Fayette charges 2.25%. The tax is withheld on gross wages where the work is performed, so a 401(k) deferral does not reduce it. Kentucky has hundreds of local jurisdictions with rates from about 0.5% to 2.5%, and some smaller cities cap the wage base at the Social Security limit. This calculator adds the local line when you select a work city. Source: Louisville Metro Revenue Commission and Lexington-Fayette Urban County Government.
How much is the Kentucky standard deduction for withholding?
For 2025 the Kentucky standard deduction used in withholding is $3,270 for every employee, regardless of filing status. Kentucky does not use filing-status brackets or per-dependent allowances in its withholding formula; the single $3,270 deduction is subtracted from annual wages before the flat 4% rate is applied. For 2026 the standard deduction rises to $3,360. Source: Kentucky Department of Revenue 2025 and 2026 Withholding Tax Formula.
Does a 401(k) contribution reduce Kentucky state tax and the local occupational tax?
It reduces the state tax but not the local occupational tax. Kentucky income tax begins with your federal adjusted gross income, and a traditional 401(k) or 403(b) elective deferral is already excluded from federal taxable wages, so it lowers the Kentucky state base too. The Louisville and Lexington occupational tax, by contrast, is charged on gross wages where the work is performed, so a 401(k) deferral does not reduce it. A worker deferring $7,800 a year saves about $312 of Kentucky state tax at the flat 4% rate, while the local tax stays the same. The deferral also does not reduce Social Security and Medicare wages.
Do Kentucky employees pay state unemployment tax?
No. Kentucky unemployment insurance is funded entirely by employer contributions to the Office of Unemployment Insurance. Employees pay nothing toward Kentucky unemployment, so there is no employee unemployment line on a Kentucky paycheck. Kentucky also has no state disability insurance or paid-family-leave payroll deduction from wages. Source: Kentucky Office of Unemployment Insurance.
What is the Kentucky income tax rate for 2025 and 2026?
Kentucky has a flat individual income tax. The rate is 4% for 2025 and falls to 3.5% for tax years beginning on or after January 1, 2026, under the statutory rate-reduction schedule. Because the standard deduction is subtracted first, the effective Kentucky rate on gross wages is a little under the headline. Kentucky has been stepping its flat rate down from 5% in 2022 through revenue-triggered cuts. Source: Kentucky Department of Revenue.
What does Form K-4 do in Kentucky?
Form K-4 is Kentucky's withholding certificate. Unlike the old system, it does not use per-allowance counts; the $3,270 standard deduction is built into the withholding formula automatically. Employees use the K-4 mainly to claim an exemption from Kentucky withholding (for example, a full-year nonresident of a reciprocal state, or someone who expects no Kentucky tax liability) or to request additional Kentucky withholding. If you hold more than one job, the standard deduction is applied on each job, so Kentucky suggests withholding an extra $130.80 a year to avoid a shortfall. Source: Kentucky Department of Revenue Form K-4.
Does Kentucky have tax reciprocity with other states?
Yes. Kentucky has income tax reciprocity with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin. A resident of one of those states who works in Kentucky files the reciprocity form with the employer so that Kentucky state income tax is not withheld; the home state taxes the wages instead. Reciprocity covers only the state income tax. The local Louisville or Lexington occupational tax still applies to the wages you earn in that jurisdiction.
Why does my actual Kentucky paycheck differ from this estimate?
This calculator estimates standard federal withholding, FICA, the flat Kentucky state withholding after the $3,270 standard deduction, and the local occupational tax when you select a work city. Actual paychecks also reflect post-tax deductions such as Roth 401(k) contributions and garnishments, year-to-date cumulative Social Security tracking, your exact city and county occupational rate, any wage cap a smaller city applies, employer-specific payroll adjustments, mid-year K-4 changes, and any additional Kentucky withholding you requested. The calculator assumes consistent pay each period and does not track cumulative wages across the year.
What To Do Next
Start by confirming three Kentucky-specific lines on your most recent pay stub. First, check the state line: it should be a flat 4% of your wages after the $3,270 standard deduction. Second, if you work in a city or county with an occupational tax, check for that local line on your gross wages, and confirm the rate matches your actual work location. Third, if you are a resident of a reciprocal state, confirm whether Kentucky state tax should be withheld at all.
If the local rate or the reciprocity treatment is wrong, the fix is a corrected Form K-4 or a work-location correction with your employer. If you are a reciprocal-state resident, file the reciprocity certificate so Kentucky state tax stops, but remember the local occupational tax still applies to the days you work in the city.
For the full Kentucky employer picture, including the local occupational taxes, the state unemployment wage base, and filing frequencies, read the Kentucky Payroll Taxes guide. To understand how withholding connects to your year-end liability, see How Payroll Taxes Work and W-4 Withholding Explained. To decode every line on the stub itself, use How to Read a Pay Stub. If you also have self-employment income, the 1099 Tax Calculator estimates the federal side including self-employment tax.
Sources & Editorial Disclosure
- Kentucky Department of Revenue, 2025 Withholding Tax Formula (42A003(TCF)) (flat 4% rate; $3,270 standard deduction; official biweekly example $39,000 → $54.97; multiple-W-2 note $130.80)
- Kentucky Department of Revenue, 2026 Withholding Tax Formula (42A003(TCF)) (flat 3.5% rate; $3,360 standard deduction for 2026)
- Kentucky Department of Revenue, 2026 Standard Deduction Announcement ($3,360 for 2026)
- Kentucky Department of Revenue, Individual Income Tax (flat-rate schedule; reciprocity states)
- Louisville Metro Revenue Commission (occupational license fee 2.2% resident / 1.45% nonresident on gross wages)
- Lexington-Fayette Urban County Government, Occupational License Fee (2.25% on compensation)
- Kentucky Office of Unemployment Insurance (employer-funded UI; $12,000 wage base for 2026; no employee contribution)
- IRS Publication 15-T (2025), Employer's Tax Guide to Federal Income Tax Withholding
- IRS Topic 751, Social Security and Medicare Withholding Rates
- IRS Topic 560, Additional Medicare Tax
- Social Security Administration, 2025 Wage Base ($176,100)
- Authored by Munib Ur Rehman · Reviewed by Nausheen Shahid, LMN Tax Inc. Not affiliated with the IRS or the Commonwealth of Kentucky. For informational purposes only.