Kentucky · 2027 and beyond
Kentucky in 2027 and beyond: what is already law, and what is still open
No tax measure on the ballot. The rate is 3.5% for 2026 and stays 3.5% for 2027. What is on the 2026 return, what starts with tax year 2027, and what is scheduled or conditional after that.
By Charles Trautman, EA, editor
Need to Know Tax · written from Kentucky Department of Revenue sources and the unofficial November 3 election returns, November 12, 2026 · not yet reviewed by a Kentucky practitioner
No tax measure on the ballot. The rate is 3.5% for 2026 and stays 3.5% for 2027. This page keeps apart three things that get mixed together in the news: what is on the 2026 return you file in early 2027, what begins with tax year 2027, and what is scheduled, conditional or still undecided after that. Election figures are the unofficial November 3, 2026 returns and are not final until the state certifies them.
What the voters decided on November 3, 2026
No statewide tax measure was on the November 3, 2026 ballot in Kentucky. Nothing voted on that day changes a Kentucky return.
This return, next year, and later
| When | What applies |
|---|---|
| The 2026 return, filed in early 2027 | The flat rate is 3.5%, down from 4%. |
| Kentucky does not allow the federal deductions for tips, overtime or car-loan interest (HB 757). | |
| The homestead exemption is $49,100 for the 2025 and 2026 tax years. | |
| Starting with tax year 2027 | The rate holds at 3.5%; the state missed the revenue trigger for a 2027 cut by $7.5 million. |
| The homestead exemption resets for 2027 and 2028. | |
| School district occupational taxes are frozen: no new districts and no rate increases from January 1, 2027. | |
| 2028 and later, or conditional | On current numbers the rate is 3.5% for 2028 as well. |
| HB 775 allows a quarter-point cut on a partial revenue test in later years. |
Items under 2027 and later do not change the 2026 return. They matter for 2027 withholding, estimated payments and planning. The detail behind each line is in the other Kentucky articles.
The 2025 federal law and the Kentucky return
Kentucky is a static-conformity state: it follows the Internal Revenue Code as of a fixed date and the General Assembly moves the date when it chooses. Form 740 starts from federal AGI, so the deductions taken after AGI would not have arrived anyway.
That is the reason a change on the federal return, such as the deductions for tips, overtime and people 65 and older, may or may not show up on the Kentucky return. The federal side is in The new deductions for tips, overtime and seniors.
What to watch
The next revenue trigger calculation, after the fiscal year closes June 30, 2027. When something on this page changes, the change is logged on the updates page with its date.
What to bring
- Your 2026 federal and Kentucky returns, once filed, to set 2027 withholding and estimated payments against them
- Your last pay stub of 2026 and the first of 2027, to see whether withholding changed
- Any notice from the state about a 2027 rate, credit or filing change
Questions people ask
Does anything here change the Kentucky return I file in early 2027?
Only what is listed under the 2026 return. Everything listed under 2027 or later affects withholding, estimated payments and planning, not the return for 2026.
How will I know if this page changes?
Every change is logged on the updates page with its date and the article it affects. State legislatures meet in early 2027 and some act before the filing deadline.
Kentucky, after the election
No tax measure on the ballot. The rate is 3.5% for 2026 and stays 3.5% for 2027.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
Questions about this article in Kentucky are answered by [your practice name] · [your phone] · [your email address]. We’re looking for an EA or CPA in each Kentucky city to hold that city’s seat and take this spot — is that you?
An invitation to Kentucky EAs and CPAs
These Kentucky pages were written by the editor from the Kentucky Department of Revenue’s own publications, and they need a Kentucky practitioner’s eye. One enrolled agent or CPA in each Kentucky city holds that city’s seat: reads these pages before the filing season and is credited as a reviewer, is named on every page of their city’s edition, and answers its readers’ questions. $1,000 for the 2026 season, the charter price. Take your city’s seat (a two-minute form and a card), tell us you’re interested, write to editor@needtoknowtax.com, or read how it works.
Sources and where to check
- Kentucky General Assembly: House Bill 1 (2025), Acts chapter 1, the 3.5% rate and the trigger in KRS 141.020
- Kentucky General Assembly: House Bill 757 (2026) bill record, Acts chapter 161
- Kentucky DOR: TY2026 E-File Handbook, what’s new for 2026 (conformity, FSTC thresholds, 2210-K, 461-K, 8863-K)
- Kentucky DOR: 2026 standard deduction, $3,360 (Sept. 4, 2025)
- Kentucky DOR: 2027 standard deduction, $3,470 (Sept. 11, 2026)
- Kentucky DOR: 2025–2026 homestead exemption, $49,100 (Nov. 14, 2024)
- Kentucky DOR: Individual Income Tax overview (still showing the 2025 rate and conformity date at this writing)
- Dean Dorton: Kentucky’s 2026 legislative session, HB 757 decoupling and sales tax changes (April 17, 2026)
- Kentucky Public Radio: state misses budget trigger for income tax cut by more than $1 billion (Sept. 4, 2026)
- Hoptown Chronicle / Kentucky Lantern: state misses 2027 trigger by $7.5 million (Sept. 2025)
- Louisville Metro Revenue Commission: occupational license tax rates, 2.2% resident / 1.45% nonresident
- Ballotpedia: Kentucky 2026 ballot measures