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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Kentucky VS COUNTRY B Tennessee

Side-by-side analysis of income tax, effective rates, and take-home pay for Kentucky and Tennessee in 2026.

Daniel · CountryTaxCalc Updated May 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
Kentucky has a flat 3.5% income tax (reduced from 4.5% in 2023), while Tennessee has no state income tax (0%). Moving to Tennessee saves $3,382/year on $100k income. Tennessee also has lower property taxes (0.52% vs KY's 0.74%). However, Tennessee has much higher sales tax (9.55% highest in US vs KY's 6%). Overall, Tennessee offers significant tax savings, especially for high earners. The KY-TN border sees heavy migration driven by Nashville's boom.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🐎
COUNTRY A
Kentucky
TAX RATE
3.5%
Flat Rate

Flat 3.5% (was 4.5%)

🎸
COUNTRY B
Tennessee
TAX RATE
0%
No Income Tax

Constitutional prohibition

TYPICAL ANNUAL DIFFERENCE
Moving from Tennessee → Kentucky at $100,000
$3,382

That's $282/month back in your pocket

Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.

GROSS INCOME
🐎 KY TAX
🎸 TN TAX
SAVINGS
10-YEAR
$50,000
$1,632
$0
$1,632
$16,320
$100,000
$3,382
$0
$3,382
$33,820
$200,000
$6,882
$0
$6,882
$68,820
$500,000
$17,382
$0
$17,382
$173,820
💡

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🐎

Kentucky Pros & Cons

+ PROS
  • Lower sales tax: 6% (vs TN 9.55%) saves $355/year on $10k spending
  • Bourbon heritage: Whiskey tourism, distillery culture
  • Horse racing: Kentucky Derby, Churchill Downs
  • Lower cost of living: Louisville 8% cheaper than Nashville
  • Better schools: KY ranks #27 vs TN #32 in K-12 education
− CONS
  • Income tax: 3.5% flat costs $3,382 on $100k, $17,382 on $500k
  • Higher property tax: 0.74% (vs TN 0.52%) costs $550-$2,200 more/year
  • Limited jobs: Louisville 1.3M vs Nashville 2.0M metro
  • Slower growth: KY population stable vs TN +10% (2020-2026)
  • Brain drain: Young professionals leave for Nashville/Charlotte
🎸

Tennessee Pros & Cons

+ PROS
  • Zero income tax: Save $3,382/year on $100k, $17,382 on $500k
  • Lower property tax: 0.52% (vs KY 0.74%) saves $550-$2,200/year
  • Nashville boom: Music City tech hub, healthcare (HCA), tourism
  • No retirement tax: $0 on Social Security, pensions, withdrawals
  • Population growth: +10% since 2020, job opportunities
− CONS
  • Highest sales tax: 9.55% (highest in US) vs KY 6% costs $355 more/year
  • Expensive: Nashville median $425k (vs Louisville $240k, 43% cheaper)
  • Hot/humid summers: 90°F+ regularly (similar to KY)
  • Traffic: I-24, I-65 congestion, limited transit
  • Worse schools: TN ranks #32 vs KY #27 in K-12 education
FAQ

Frequently Asked Questions

How much will I save moving from Kentucky to Tennessee?

On $100,000 income, Tennessee saves $3,382/year in income tax (KY 3.5% vs TN 0%). TN also has lower property tax (0.52% vs KY 0.74%). On a $400k home, TN pays $2,080/year vs KY $2,960/year—difference of $880/year. However, TN sales tax is much higher (9.55% vs KY 6%)—costs $355 more annually. Net savings: $3,907/year. Over 10 years: $39,070.

Is there significant Kentucky to Tennessee migration?

Yes, heavy KY → TN migration. In 2023, 18,472 people moved KY → TN (vs 9,834 TN → KY), net gain of 8,638 for Tennessee. Migration drivers KY → TN: no income tax (save $3,382+ annually at $100K), Nashville boom (jobs in tech, healthcare, music), lower property tax. Reverse migration (TN → KY) driven by: cheaper housing (Louisville 43% cheaper), lower sales tax, bourbon culture.

Louisville vs Nashville: which city is better economically?

Nashville wins economically: no income tax (save $3,382 annually at $100K), faster job growth (+10% vs KY stable), larger metro (2M vs 1.3M), diverse economy (tech, healthcare, tourism). Louisville wins for: cheaper housing (43% cheaper), lower cost of living (8% cheaper), lower sales tax (6% vs 9.55%). Choose Nashville for career opportunities. Choose Louisville for affordability.

Which state is better for retirees?

Tennessee wins for retirees: zero income tax on retirement income (Social Security, pensions, 401k withdrawals), lower property tax (0.52% vs 0.74%), no state estate tax. However, TN has highest sales tax (9.55% vs KY 6%)—costs $355/year more. Kentucky wins for: cheaper cost of living, bourbon culture. Most KY retirees move to TN for tax savings.
From the brief
NL27%new 2027 rate, down from 30%
DK65.4kkr/mo threshold, cut from 78k
MT1940snon-dom regime unchanged since
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