2026 tax year · Kentucky
Marketplace seller taxes in Kentucky
Etsy, eBay, Shopify and the rest report your gross and withhold nothing. The gap between that and what you are actually taxed on is your costs, in Kentucky that gap is worth $6,808 in tax.
Take a driver who grossed $45,000 over 18,000 business miles. After mileage at 74.3 cents and the rest of the stack, worked through on the marketplace seller page $26,775 comes off and $18,225 is left as taxable profit. That profit is what Kentucky and the IRS charge against.
What that leaves you owing in Kentucky
Kentucky taxes income at a flat 3.5% for 2026, applied on top of federal income tax and self-employment tax.
| Self-employment tax | $2,575 |
| Federal income tax | $67 |
| Kentucky income tax | $593 |
| Total tax | $3,235 |
| Effective rate on gross | 7.2% |
Earning more in Kentucky
A single filer taking the standard deduction, this work as the only income, the calculator above handles the other filing statuses. Miles rise with earnings, so the deduction rises too, and the effective rate on gross climbs more slowly than it would for someone whose income grew without expenses attached:
| Volume | Gross | Mileage off | Taxable profit | Kentucky tax | Total tax | Rate on gross |
|---|---|---|---|---|---|---|
| Part-time | $15,000 | $0 | $15,000 | $488 | $2,607 | 17.4% |
| Steady side income | $45,000 | $0 | $45,000 | $1,464 | $10,043 | 22.3% |
| Full-time | $72,000 | $0 | $72,000 | $2,342 | $17,145 | 23.8% |
Switching state opens that state's page.
Enter your numbers and press Calculate to see your 2026 estimate.
Kentucky specifics that change the number
On the 2026 rate itself: reduced from 4% to 3.5% on Jan 1, 2026.
Kentucky also has local income tax that the estimate above does not model, many cities/counties levy occupational tax.. Add it separately for where you live and work.
Selling into and out of Kentucky
Income tax follows you: Kentucky taxes your profit wherever the buyer was. Sales tax does not. Marketplace facilitator laws make the platform collect and remit sales tax on your behalf in most states, which is why a seller can have customers in all fifty and still file only one income tax return. Selling off-platform is where that stops being true.
On $18,225 of profit, what the states around Kentucky would charge:
| State | Its tax | vs Kentucky |
|---|---|---|
| Ohio | $0 | −$638 |
| Tennessee | No income tax | −$638 |
| West Virginia | $442 | −$196 |
| Indiana | $538 | −$100 |
| Missouri | $705 | +$67 |
| Virginia | $790 | +$153 |
| Illinois | $902 | +$264 |
- Ohio would take $638 less, $0 against Kentucky's $638.
- Tennessee has no income tax at all, so the same work done there costs $638 less in state tax than it does in Kentucky.
- West Virginia would take $196 less, $442 against Kentucky's $638.
- Indiana would take $100 less, $538 against Kentucky's $638.
- Missouri would take $67 more, $705 against Kentucky's $638.
- Virginia would take $153 more, $790 against Kentucky's $638.
- Illinois would take $264 more, $902 against Kentucky's $638.
Marketplace seller tax questions in Kentucky
How much should a Kentucky seller set aside?
About 7.2% of gross on the $45,000 example, $3,235 across self-employment tax, federal income tax and $593 to Kentucky. Set aside from each payout rather than finding it in April.
Does the $45,000 on my 1099-NEC match what Kentucky taxes?
No. Kentucky taxes profit, not gross. After $26,775 of deductions the taxable figure is $18,225, so the Kentucky bill is $593 rather than what gross alone would suggest.