Kentuckyflat 4% income tax, 23rd lowest property tax, median home $215K

Worth knowing before you move to Kentucky

Kentucky moved to a flat income tax, 3.5% for 2026, and exempts the first $31,110 of pension and retirement income per person. It has an inheritance tax, but spouses, children, parents and siblings are exempt. Home prices are among the lowest in the country outside Louisville and Lexington, and the state has some of the cheapest electricity, much of it still coal-fired.

What Kentucky taxes, and what it doesn't

Kentucky levies a flat 4% income tax. A household earning $75,000 pays an effective 3.5%, about $2,625 a year; at $150,000 the effective rate is 3.5%. Among the 41 states that tax income, Kentucky has the 7th lowest effective rate at $100,000 of income.

Property tax runs 0.78% of home value a year, roughly $1,677 on the state's median home of $215K. The national effective rate is about 1.10%, and Kentucky has the 23rd lowest rate of the 50 states.

Combined state and local sales tax averages 6.00%, the 11th lowest in the country (the state portion is 6%).

For retirees: Social Security benefits are not taxed, pension income is partly exempt, and there is an inheritance tax on some heirs.

Capital gains are taxed as ordinary income.

Housing and the cost of living in Kentucky

Kentucky's cost of living index is 85, where 100 is the national average; that is the 3rd cheapest of the 50 states.

The median home costs $215K, 29% below the national figure and the 4th lowest among the states. A two-bedroom rents for about $1,050 a month.

Carrying costs matter as much as the price: home insurance averages $1,800 a year, flood coverage adds about $650 where it is needed, car insurance runs $2,040.

Budget $125 a month for electricity and gas, $400 a month in groceries for two, $890 a month for full-time infant care.

Safety, health and schools

Violent crime is 228 incidents per 100,000 residents in the FBI's 2023 Crime Data Explorer figures, below the median state (387); Kentucky is the 8th safest of the 50 by that measure. Property crime is 1,770 per 100,000.

Life expectancy is 73.5 years (County Health Rankings 2024). 6.8% of residents have no health insurance, and the state has expanded Medicaid. The Commonwealth Fund's 2023 scorecard ranks Kentucky's health system 24th of 50.

Education Week's 2023 Quality Counts report ranks K-12 schools 34th in the country, and the state runs a school-choice voucher program.

Politics, guns and social policy

Politically, Kentucky is a solidly Republican state that went to Trump by 26 points in 2024.

On guns, no permit is required to carry a concealed handgun, and Giffords grades the state's gun laws F.

Abortion is banned with narrow exceptions. Marijuana is medical only. Kentucky is a right-to-work state, and the minimum wage is $7.25 an hour.

Climate, risk and getting around

Natural disaster risk is moderate. The main hazards are tornado, flood, ice-storm. Annual average air quality index is 40 (under 50 is good).

Kentucky has no top-25 hub airport, with about 50 nonstop destinations from its busiest airport.