Kentucky payroll taxes
Every tax withheld from a Kentucky paycheck or paid by the employer in 2026, with rates and wage limits.
Last verified November 2, 2026. Sources: oui.doleta.gov, taxfoundation.org, oregon.gov.
| Tax | Employee pays | Employer pays | Wage limit |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $184,500 |
| Medicare | 1.45%* | 1.45% | No limit |
| FUTA | — | 0.6% | $7,000 |
| Kentucky SUTA | — | 2.7% (new) | $12,000 |
| Kentucky income tax | 3.5% | — | — |
*Plus 0.9% Additional Medicare Tax withheld on wages over $200,000. FUTA rate shown is net of the state credit.
State unemployment insurance
Kentucky charges new employers 2.7% on the first $12,000 each employee earns in a year. After a few years, the rate is based on the employer's layoff history and ranges from 0.3% to 9%. Wage base fixed by statute.
Service capacity upgrade fund assessment, included in the assigned rate (not itemized in sources)
Register and file with the Kentucky unemployment tax agency.
Income tax withholding
Kentucky has a flat income tax of 3.5% on taxable income. Occupational license taxes in many cities/counties/school districts (e.g. Louisville Metro ~2.2%, Lexington-Fayette 2.25%), withheld from wages
Frequently asked questions
- What payroll taxes do employers pay in Kentucky?
- Social Security, Medicare, federal unemployment (FUTA) and Kentucky unemployment insurance (SUTA).
- What is the Kentucky SUTA wage base for 2026?
- $12,000 per employee.
- Does Kentucky require state income tax withholding?
- Yes. Employers withhold Kentucky income tax based on the employee's state withholding certificate or federal W-4.