Most Kentucky taxpayers won't need to enter anything in the Tax section of their return. Kentucky income tax is generally calculated automatically based on the information you've already entered. For tax year 2026, Kentucky's individual income tax rate is 3.5%. Kentucky also allows eligible farmers and fishermen to use Schedule J (Farm Income Averaging), which may reduce tax on unusually high farm income.
How to Access the Kentucky Tax Section
- Select State
- Select the 3 dots to Edit Kentucky Return
- Select Tax
Kentucky Use Tax
You may owe Kentucky use tax when you purchase taxable items for use in Kentucky and Kentucky sales tax wasn't collected at the time of purchase. This most commonly happens with:
- Online purchases
- Catalog orders
- Subscription purchases
- Furniture
- Carpet
- Boats
- Other taxable tangible personal property
Kentucky's use tax rate is generally 6% of the purchase price. The amount entered in this section is added to your Kentucky tax liability. Kentucky specifically requires use tax on many untaxed out-of-state purchases, including purchases made over the internet.
Enter an amount if:
- You purchased taxable items for use in Kentucky.
- Kentucky sales tax was not charged or collected.
- You owe Kentucky use tax on those purchases.
For purchases where another state's sales tax was paid, you may be able to reduce or eliminate your Kentucky use tax obligation, depending on the amount of tax already paid.
Interest
Interest may apply when Kentucky income tax is paid after the original due date of the return.
Most taxpayers should leave this field blank unless:
- You received a notice from the Kentucky Department of Revenue showing interest due, or
- You have already calculated the interest separately.
Kentucky assesses interest on unpaid tax from the original due date until the balance is paid.
Late Payment Penalty
A late payment penalty may apply if you don't pay your Kentucky tax by the due date.
Kentucky generally assesses a penalty of 2% of the unpaid tax for each 30-day period, or fraction of a period, that the tax remains unpaid, up to a maximum of 20%. The minimum penalty is $10. If at least 75% of the tax due was paid by the original due date, the late payment penalty generally won't apply.
Most taxpayers should leave this field blank unless:
- You received a notice from the Kentucky Department of Revenue showing a penalty due, or
- You have already calculated the penalty separately.
Late Filing Penalty
A late filing penalty may apply if you file your Kentucky return after the filing deadline or extended due date.
Kentucky generally imposes a penalty of 2% of the tax due for each 30-day period, or fraction of a period, that the return remains unfiled, up to a maximum of 20%. The minimum penalty is $10.
Most taxpayers should leave this field blank unless:
- You filed your return after the due date and know the penalty amount, or
- You received a notice from the Kentucky Department of Revenue showing a penalty due.
Schedule J (Kentucky Farm Income Averaging)
Kentucky allows eligible farmers and fishermen to average certain farm income over the previous three tax years using Schedule J. Because farm income can fluctuate significantly from year to year, income averaging may lower your Kentucky tax liability when current-year farm income is unusually high.
Use Schedule J if:
- You qualify for Kentucky Farm Income Averaging.
- You need to complete Kentucky Schedule J calculations.
- You want to determine whether income averaging reduces your Kentucky tax.
If you elect farm income averaging on your federal return, Kentucky generally allows you to use the same election for Kentucky purposes. The amount of income eligible for averaging is limited to the amount elected on the federal return.
For more information, see the Kentucky Schedule J Overview article.