No Tax on Tips Calculator for Kentucky (2026)

Calculate how much Kentucky workers save now that tips are deductible from federal taxable income (caps and income limits apply) under the OBBBA.

Minimum Wage$7.25/hr

Tipped Min. Wage$2.13/hr

State Income Tax4.0%

Your Information

Hourly Wage (before tips)

Your base pay per hour

Hours Per Week

Average Tips Per Hour

Your average tip earnings per hour worked

Weeks Worked Per Year

Your Annual Tax Savings in Kentucky

$2,047

per year in federal income tax on tips

Annual Tip Income

$31,500

Federal Tax Saved on Tips

$2,047

Your Marginal Federal Rate

12.0%

FICA Still Owed on Tips

$2,410

Annual Base Pay

$3,728

Total Annual Income

$35,228

Kentucky has a state income tax rate of 4.0%. State tax treatment of tips may vary — check your state's rules.

Tips Tax Deduction in Kentucky

Under the One Big Beautiful Bill Act (OBBBA), workers in Kentucky who earn tips can deduct 100% of their tip income from federal income tax for tax years 2025 through 2028.

Kentucky Minimum Wage for Tipped Workers

The minimum wage in Kentucky is $7.25/hour. Tipped workers may be paid a lower base wage of $2.13/hour, with tips expected to make up the difference. This makes the federal tip tax deduction especially valuable for Kentucky workers.

Top Tipped Industries in Kentucky

Restaurant servers
Bartenders
Hotel staff
Bourbon tour guides

Does Kentucky Tax Tips? (State Conformity)

Yes — Kentucky still taxes tips. Kentucky has not conformed to the federal OBBBA tip deduction. Tips are deductible from federal taxable income, but you still owe Kentucky state income tax (rate: 4.0%) on tip income.

State Income Tax Applies to Tips

Kentucky has a state income tax rate of 4.0%. While the OBBBA exempts tips from federal income tax, Kentucky may still tax tip income at the state level. Check with a local tax professional for details.

How the No Tax on Tips Law Works

What Qualifies

Cash tips received directly from customers
Credit/debit card tips
Tips from tip pools or tip sharing
Service charges distributed as tips

What Doesn't Change

FICA taxes still apply: You still pay 6.2% Social Security + 1.45% Medicare on tip income
Tips must still be reported: Report all tips to your employer and on your tax return
Annual cap: Deduction limited to $25,000 per year in tip income
Income limit: The deduction applies to workers earning less than $150,000/year (single) or $300,000 (married filing jointly)

Overtime Tax Deduction in Kentucky (2026)

The same OBBBA Schedule 1-A rules apply nationwide: only the FLSA overtime premium (the half of time-and-a-half) is deductible, up to $12,500 ($25,000 joint), with MAGI phase-outs. Kentucky state income tax may still apply to overtime wages even when the federal premium deduction is available.

Use the free Overtime Tax Calculator to estimate federal savings for Kentucky workers — including common searches like “kentucky overtime tax calculator.”

Federal Calculators

Compare with the federal-level tools: Tip Tax Savings (Federal) | Overtime Tax Calculator (Federal)