State & Local Taxes

A state sales tax is levied at the rate of 6% on the purchase or lease price of taxable goods and on utility services. Local sales taxes are not levied in Kentucky.

The Kentucky Constitution requires the state to tax all classes of taxable property, and state statutes allow local jurisdictions to tax only a few classes. All locally taxed property is subject to county taxes and school district taxes (either a county school district or an independent school district). Property located inside city limits may also be subject to city property taxes. Property assessments in Kentucky are at 100% fair cash value. Special local taxing jurisdictions
(fire protection districts, watershed districts and sanitation districts) levy taxes within their operating areas (usually a small portion of the community or county).

Click here for general fact sheets on federal, state and local business and personal taxes.

State Property Tax Rates Per $100 Valuation, 2010

Selected Class of Property StateRate Local Taxation Permitted
Real Estate $0.1220 Yes
Manufacturing Machinery $0.1500 No
Pollution Control Equipment $0.1500 No
Raw Materials $0.0500 No
Goods in Process $0.0500 No
Finished Goods $0.0500 Yes
Goods-In-Transit Exempt Limited
Motor Vehicles $0.4500 Yes
Other Tangible Personal Property $0.4500 Yes

Source: Kentucky Department of Revenue.

Local Property Tax Rates Per $100 Valuation, 2012

Taxing Jurisdiction Property Taxes Per $100 Valuation
Real Estate Tangibles Motor Vehicles
Shelby $0.2482 $0.1994 $0.2385
Shelbyville $0.2750 $0.3780 $0.2610
Simpsonville $0.1110 $0.0000 $0.0000
School District
Shelby County Schools $0.7150 $0.7150 $0.4650

Source: Kentucky Revenue Cabinet.

Local Occupational License Taxes

Cities, counties and school districts may levy an occupational license tax on the net profits of businesses and/or on the salaries and wages of employees earned in the jurisdiction. Rates can vary between the two types of occupational license taxes. Occupational license taxes may be levied on businesses as either a flat rate schedule or as a percentage of apportioned net profits or gross receipts. Where both the city and county levy an occupational license tax, a credit may be given, at the option of the local governments, for the amount paid to the city against the occupational license tax of the county. (Consult local jurisdictions for further details.)

Taxing Jurisdiction Tax Rate on Salaries/Wages Tax Rate on Net Profits/Receipts
Shelby 1.00% 1.00%
Shelbyville 1.50% 1.50%
Simpsonville .50% .50%
School District
Shelby County Schools No tax No tax

Source: Kentucky Society of Certified Public Accountants.