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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 October 2026 Income tax verified October 2026 Tax Comparison 2026
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OVERVIEW
Kentucky charges a flat 3.5% state income tax on 2026 wages (after a $3,360 standard deduction), while Tennessee does not tax wages at all, so on $100,000 of wages a single filer pays about $3,382 less state income tax in Tennessee. The trade-off is sales tax: Kentucky's rate is 6%, while Tennessee's state rate is 7% plus local rates, for a 9.61% population-weighted average (Tax Foundation, July 2026). Kentucky cities and counties also levy local occupational taxes on wages, for example 2.2% for Louisville Metro residents, which widens the gap for people who live and work in those places. Higher earners come out ahead in Tennessee in almost every case; only low earners who spend most of their income on taxable goods get close to break-even. Figures assume a single filer, wages only, 2026; property tax and local taxes depend on the exact address.
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% for 2026 (4.0% in 2025)

🎸
COUNTRY B
Tennessee
TAX RATE
0%
No Income Tax

No tax on wages; Hall tax repealed in 2021

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

State income tax only: single filer, wages only, 2026. Excludes local occupational taxes, sales tax and property tax, which are covered below.

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
$30,000
$932
$0
$932
$9,320
$50,000
$1,632
$0
$1,632
$16,320
$75,000
$2,507
$0
$2,507
$25,070
$100,000
$3,382
$0
$3,382
$33,820
$150,000
$5,132
$0
$5,132
$51,320
$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% state rate, and Tax Foundation shows a 0.00% average local rate, versus Tennessee's 9.61% average combined rate
  • Groceries are exempt from Kentucky sales tax (food and food ingredients, but not prepared food, candy, soft drinks, alcohol or tobacco), and prescription drugs are exempt too (Kentucky Department of Revenue guidance)
  • One flat 3.5% state rate with no brackets, which makes the state income tax easy to estimate
  • Homeowners aged 65 or older, or totally disabled, get a homestead exemption of $49,100 off assessed value for 2025 and 2026 (Kentucky Department of Revenue)
− CONS
  • Income tax: a flat 3.5% on wages after a $3,360 standard deduction, about $3,382 on $100,000 and $17,382 on $500,000 for a single filer
  • Local occupational taxes: many Kentucky cities and counties tax gross wages on top of the state tax; Louisville Metro charges 2.2% for residents and 1.45% for non-residents who work there (Louisville Metro Revenue Commission)
  • Extra filings: Kentucky residents file Form 740 and may also face local occupational tax withholding or returns
  • Property tax depends on county and school district rates, so the bill can differ a lot between two Kentucky addresses
🎸

Tennessee Pros & Cons

+ PROS
  • No state tax on wages: nothing to pay on $100,000 of salary where Kentucky would charge about $3,382
  • The Hall income tax on interest and dividends was repealed for tax periods beginning on or after January 1, 2021 (Tennessee Department of Revenue)
  • Residential property is assessed at 25% of appraised value, and the tax is that assessed value divided by 100 times the local rate per $100 (Tennessee Comptroller)
  • Moving from Kentucky also removes the state income tax return and any Kentucky local occupational tax tied to a Kentucky job or address
− CONS
  • Sales tax: 7% state rate plus local rates, a 9.61% population-weighted average and second-highest combined rate in the US (Tax Foundation, July 2026)
  • Food is taxed in Tennessee, at a reduced state rate, where Kentucky exempts groceries
  • Low earners who spend most of their income on taxable goods can see the sales tax erase much of the income-tax saving
  • Business-side taxes still exist (for example, Tennessee taxes some business income through its franchise and excise taxes); if you are self-employed or own a company, check the rules before assuming a zero bill
FAQ

Frequently Asked Questions

How much will I save moving from Kentucky to Tennessee?

On state income tax alone, a single filer with $100,000 of wages pays about $3,382 less in Tennessee, because Kentucky charges a flat 3.5% after a $3,360 standard deduction and Tennessee does not tax wages. That is about $1,632 at $50,000 and $6,882 at $200,000. Those figures come from our engine for 2026, single filer, wages only. Your real saving is lower once sales tax and property tax are included, and higher if you currently pay a Kentucky local occupational tax such as Louisville's 2.2% resident rate.

Does Tennessee's higher sales tax cancel out the income tax saving?

Usually not, but it can at low incomes. Using the Tax Foundation's 9.61% average Tennessee combined rate against Kentucky's 6%, each $1 of taxable spending costs about 3.6 cents more in Tennessee. The income-tax saving is bigger than that extra sales tax unless taxable spending exceeds roughly $25,800 at a $30,000 income, $45,200 at $50,000 or $93,700 at $100,000. This is a rough guide: Kentucky exempts groceries and prescription drugs while Tennessee taxes food, and your actual local Tennessee rate may be above or below the average.

Do I pay local income tax in Kentucky?

Often yes. Many Kentucky cities and counties levy an occupational license tax on wages earned there. Louisville Metro, for example, measures it at 2.2% of wages for residents (1.45% for non-residents), according to the Louisville Metro Revenue Commission. Rates differ by jurisdiction, so check the city and county where you live and where you work.

Is the Tennessee Hall tax still in effect?

No. The Tennessee Department of Revenue states that the Hall income tax was repealed for tax periods beginning on or after January 1, 2021, and taxpayers should not file Hall returns for those years. Tennessee therefore no longer taxes interest and dividend income through the Hall tax.

How do property taxes compare?

They depend on the county, city and school district, so a single state-wide comparison is misleading. In Tennessee, residential property is assessed at 25% of appraised value and the bill is assessed value divided by 100 times the local rate per $100 (Tennessee Comptroller). Kentucky bills are also set locally; owners aged 65 or older and totally disabled owners can claim a $49,100 homestead exemption for 2025 and 2026. For a specific address, use the county property valuation office's published rates rather than a state average.

Louisville or Nashville: which is cheaper on taxes?

For a wage earner, Nashville avoids the Kentucky state income tax and the Louisville occupational tax. At $100,000 of wages, a Louisville resident faces about $3,382 of Kentucky state income tax plus $2,200 of Louisville occupational tax at 2.2%. Nashville has the higher sales tax, and housing costs differ, so run both budgets before deciding. We have not verified Nashville's exact combined sales tax rate here.
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