Lexington, KY Taxes 2025
Complete local tax guide and OBBBA calculator
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Lexington Tax Overview 2025
Horse capital with local occupational tax. University town.
Local Income Tax
2.25%
City/county rate
Sales Tax
6.00%
State + local
Property Tax
0.83%
Effective rate
Median Home
$240,000
Home value
State Tax Information
Lexington is located in Kentucky (4% state income tax)
💼 Lexington Local Income Tax
Lexington imposes a local income tax of 2.25% on residents. This is in addition to any state income tax you may owe to Kentucky.
Local income taxes are common in Ohio, Pennsylvania, and a few other states. They're typically withheld from your paycheck if you work in Lexington, regardless of where you live.
Total Income Tax Burden in Lexington
🛒 Lexington Sales Tax 2025
The combined sales tax rate in Lexington is 6.00%. This includes both the Kentucky sales tax and any local sales taxes.
Sales tax applies to most retail purchases in Lexington. Some items like groceries, prescription medications, and clothing may be exempt or taxed at reduced rates depending on Kentucky law.
Sales Tax Breakdown
Sales Tax Examples
| Purchase Amount | Sales Tax | Total |
|---|---|---|
| $50 | $3.00 | $53.00 |
| $100 | $6.00 | $106.00 |
| $500 | $30.00 | $530.00 |
| $1,000 | $60.00 | $1,060.00 |
🏠 Lexington Property Tax 2025
The average effective property tax rate in Lexington is 0.83%. Based on the median home value of $240,000, the typical homeowner pays approximately $1,992 per year in property taxes.
Property taxes fund local services including schools, police, fire departments, roads, and parks. Rates vary by specific location within Lexington based on school district and other taxing authorities.
Estimated Annual Property Tax in Lexington
| Home Value | Annual Tax | Monthly | SALT Deductible? |
|---|---|---|---|
| $200,000 | $1,660 | $138 | ✓ Yes |
| $300,000 | $2,490 | $208 | ✓ Yes |
| $400,000 | $3,320 | $277 | ✓ Yes |
| $500,000 | $4,150 | $346 | ✓ Yes |
| $750,000 | $6,225 | $519 | ✓ Yes |
| $1,000,000 | $8,300 | $692 | ✓ Yes |
💡 SALT Tip: Under the OBBBA, you can deduct up to $40,000 in state and local taxes (SALT) on your federal return. This includes property taxes, state income taxes, and local income taxes.
💰 Lexington Cost of Living
Housing Costs
Tax Summary
OBBBA Tax Benefits for Lexington Residents
Local income tax makes federal OBBBA deductions valuable.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced several federal tax deductions that can significantly reduce your tax burden as a Lexington resident.
Available OBBBA Deductions:
Calculate Your Lexington Tax Savings
Use our free OBBBA calculator to see exactly how much you could save on your 2025 federal taxes as a Lexington resident.
Calculate My SavingsFrequently Asked Questions
What is the sales tax in Lexington?
The combined sales tax rate in Lexington is 6.00%. This includes both state and local sales taxes.
Does Lexington have a local income tax?
Lexington has a local income tax of 2.25%. This is in addition to any state and federal income taxes.
What is the property tax rate in Lexington?
The average effective property tax rate in Lexington is 0.83%. On a home worth $240,000, you'd pay approximately $1,992 per year.
How do OBBBA deductions benefit Lexington residents?
Local income tax makes federal OBBBA deductions valuable. You can use our free calculator to estimate your total savings from tips, overtime, auto loan interest, SALT, and senior bonus deductions.