Bonus Tax Calculator — Kentucky (2026)
Bonuses in Kentucky are taxed as supplemental wages: the employer usually withholds a flat 22% federal, plus 7.65% FICA and Kentucky state withholding. Withholding is not the final tax; the true cost is settled on your return. Enter your bonus to see both. Kentucky uses a flat personal income tax of 4.00% applied to taxable income after a state standard deduction of $3,270.
Kentucky Bonus Tax Calculator
The gross bonus before withholding.
Percentage method vs aggregate method
Under the percentage method the bonus is separated from regular pay and hit with the flat 22% federal rate (37% above $1 million of supplemental wages in a year). Under the aggregate method the employer combines the bonus with your normal check and withholds at your marginal rate — which can temporarily withhold far more than 22%.
Either way the bonus is ordinary income. If your marginal federal bracket is 24% or higher, the 22% flat withholding leaves you short at filing time; if you are in the 12% bracket, you are over-withheld and get it back as a refund.
The Kentucky layer on bonuses
Kentucky taxes bonus income at the same flat rate as salary — up to 4.00%. A $10,000 bonus therefore carries roughly $400 of Kentucky tax at the top rate, on top of federal and FICA.
Most Kentucky cities and counties levy a local occupational license tax of 0.5%–2.5% (Louisville Metro: 2.2%).
Reducing the tax on a Louisville bonus
Deferring part of the bonus into a 401(k) or HSA cuts federal and Kentucky income tax immediately, though FICA still applies. Some employers allow a separate bonus deferral election — ask payroll before the payment date, not after.
Timing matters too: pushing a bonus into January shifts the tax year, useful if this year included unusually high income from bourbon work or an equity event.
Local and payroll taxes Kentucky adds on top
Many Kentucky cities and counties levy an occupational license tax on wages, from about 0.5% to 2.5% in Louisville. That deduction sits outside the federal and state income tax lines, so build it into your own budget on top of the numbers above.
Most Kentucky cities and counties levy a local occupational license tax of 0.5%–2.5% (Louisville Metro: 2.2%).
Bonuses are wages, so every local layer that applies to your regular Kentucky paycheck applies to the bonus too — which is why a supplemental payment often nets a smaller share than your salary does.
Working across a state line from Kentucky
Kentucky holds income-tax reciprocity agreements with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin. If you commute between them, your wages are taxed only by your state of residence — file the exemption certificate with your employer so the wrong state is not withheld from every paycheck.
Remote and hybrid work complicates this further: most states tax income where the work is physically performed, so a Louisville resident spending part of the year at a client site in Tennessee may owe a nonresident return there. Keep a day-count log if you split time between states.
The rest of your Kentucky tax bill
Kentucky charges a 6% state sales tax, homeowners pay an average effective property tax of 0.83% of market value, and the minimum wage in force during 2026 is $7.25 an hour.
6% statewide with no local sales tax, though services are increasingly covered.
Income tax is only one part of a state's take. Kentucky recovers revenue through sales and property tax as well, which is why headline income tax rates alone are a poor guide to how far a salary really goes. Kentucky exempts Social Security and the first $31,110 of pension income per person.
Kentucky vs Tennessee on the same salary
On a $75,000 salary, a single filer keeps about $58,723 a year in Kentucky against roughly $61,593 in Tennessee — a difference of $2,869, or $239 a month.
Effective combined rates are 21.7% in Kentucky and 17.9% in Tennessee. Set that gap against living costs: index 91 here versus 91 there, with property tax at 0.83% and 0.66% respectively.
Kentucky income tax brackets 2026 (single filer)
| Taxable income | Rate |
|---|---|
| $0 and up | 4.00% |