In Kentucky, property taxes are used as a leading source of revenue and are determined by tax districts within each county. Property tax revenue is appropriated to schools, fire and police departments, as well as other local government groups. Property owners will find some of the lowest property taxes in the nation in Kentucky, with its property tax rates mainly commensurate with those of its neighboring states. Learn how to estimate and understand your Kentucky property tax bill in order to plan for your annual tax obligations.

Estimating Your Property Taxes in Kentucky

Property taxes in Kentucky are calculated through the following equation:

Value x Assessment Ratio x Tax Rate = Effective Property Tax

Property values are typically based on a property’s location, land, size and other notable property characteristics. Many states utilize an assessment ratio to calculate the assessment value for effective property tax rates. Assessment ratios are determined by county. In most counties in Kentucky, the assessment ratio is 100%, which means property owners pay taxes on the full value of their properties. The final factor for determining the effective property tax is the tax rate. In Kentucky, tax rates are expressed as cents per $100. The average real estate property tax rate in Kentucky is 31.5 cents per $100.

Annual tax bills are based on a property’s assessed value as of Jan. 1. In most counties, tax bills are provided in October or November. Many counties in Kentucky provide a property tax discount for property owners who pay their tax bills immediately upon receipt. The state also administers penalties for late tax payments.

In Kentucky, the average effective tax rate, as of 2015, was 0.85%. The county with the highest tax rate was Oldham County and the county with the lowest tax rate was Wolfe County.

Effective tax rates and payment averages vary across counties in Kentucky, ranging from 1.15 to 0.49% across the state. The average median home value in Kentucky is $96,453 and the average median annual property tax payment is $736. Kentucky has 120 counties. The county paying the highest median annual property tax is Oldham County at $2,510.

How Kentucky's Property Tax Compares to its Neighboring States

Kentucky has seven neighboring states, and its effective property tax rate is at the median. Its neighboring states include Illinois, Ohio, Missouri, Indiana, Virginia, Tennessee and West Virginia. According to data from 2015, Kentucky’s average effective tax rate was 0.85%, which ranked 32nd in the United States. Illinois has the highest average effective property tax rate of Kentucky's neighboring states at 2.32%, ranked second in the U.S. Ohio has an average effective property tax rate of 1.55%, which is ranked 12th in the nation. Missouri has an average effective property tax rate of 1.02%, ranked 26th. Indiana has an average effective property tax rate of 0.86%, which is ranked 28th. Virginia's average effective property tax rate is 0.78%, ranked 37th. Tennessee has an average effective property tax rate of 0.75%, ranked 38th, and West Virginia has an average effective property tax rate of 0.59%, which is ranked 45th.

How Kentucky's Property Tax Compares to the National Average

Survey data from 2016 shows the national average for effective property tax rates at 1.13%. Kentucky's average effective property tax rate as of 2016 was 0.84%, which ranked 33rd. New Jersey reports the highest average effective tax rate in the U.S. at 2.29%, and Hawaii reports the lowest average effective tax rate in the country at 0.28%.

Property owners in Kentucky find property tax rates highly comparable to its neighboring states, yet in the lower half of national averages. Overall, property owners who plan ahead for property tax obligations will have an easier time managing their annual tax liabilities. Many counties in Kentucky offer discounts for savvy property owners who make timely annual property tax payments.

Maryland Property Tax Guide

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