Cost of Living in Kentucky
Things cost about ▼ 10% less in Kentucky than the national average.
What Things Cost in Kentucky
Compared to the US national average
See raw index numbers
US national average = 100. Source: BEA Regional Price Parities 2023.
Kentucky is one of the most affordable states in the country, with a cost of living about 11% below the national average and housing roughly 27% below. Louisville and Lexington are the two main metro areas, both offering genuine city amenities at prices that make coastal transplants do a double-take. Louisville has bourbon, the Derby, and a food scene that earned it national recognition. Lexington revolves around the University of Kentucky and the horse industry. The state moved to a flat 4% income tax, simplifying the picture and making it competitive with neighboring Tennessee and Indiana.
Kentucky at a Glance
Taxes in Kentucky
Kentucky's state income tax tops out at 4% flat. The combined sales tax averages 6%. Property taxes run about 0.83% of home value, which on a $183,600 median home means roughly $1,524/year.
Cities in Kentucky
Ranked from least to most expensive. Index 100 = national average.
Explore Kentucky
FAQ About Kentucky
Yes. Kentucky's cost of living is about 11% below the national average. Housing is the biggest bargain at roughly 27% below average with a median home price of about $183,600. Louisville, the largest city, has median home prices under $241,700 and a cost of living below the national average even as a metro area. Smaller cities and rural areas are even more affordable.
Kentucky has a flat 4% state income tax, recently reduced from 5%. This is simple and relatively competitive. Be aware that Louisville and some other cities levy an additional occupational tax on wages, typically 1% to 2.5%, which functions like a local income tax. Sales tax is 6% with no local additions.
No. Louisville's cost of living is below the national average. Median home prices are under $183,600 in the metro area, and many of the city's most desirable neighborhoods (Highlands, Crescent Hill, St. Matthews) offer homes for $250,000 to $400,000 that would cost two to three times as much in peer cities like Nashville or Charlotte.