Business Taxes

One of Kentucky’s many advantages is its competitive tax climate. According to a 2018 report from the Tax Foundation’s State Business Tax Climate Index, Kentucky’s tax climate improved more than any other state over the past two years jumping from #33 to #18. A summary of state and federal business taxes can be found in the additional resources section below.

The Kentucky Business One Stop website also offers an in-depth overview of taxes – federal, state and local – required of businesses operating in the Commonwealth, including:

  • Federal Tax Registration Requirements - In addition to obtaining an EIN, the federal tax identification number for a business, it is important for business owners to understand federal tax obligations. The Internal Revenue Service (IRS) has a number of useful online resources to help in this area.
  • State Tax Registration Requirements - By completing the multi-use Kentucky Tax Registration Application with the Department of Revenue, your business will automatically enroll for the most common business taxes.
  • Special State Tax Registration Requirements – Depending on the product or service your business provides, there may be other state taxes that apply to your business. Most of these require that you file a special application/registration with the Department of Revenue.
  • Local Requirements - You should also check with each city/county government where you intend to transact business or have a business presence. Many cities and counties require a local business license and/or impose an occupational tax or other type of tax on individuals and firms conducting business within their jurisdiction.

Additional Resources