2026 tax year · Kentucky
RSU tax in Kentucky
A $60,000 vest costs $2,100 in Kentucky tax on top of the federal bill. And the federal share withheld is $2,970 short.
What a $60,000 vest actually costs in Kentucky
A single filer already earning $180,000 in salary. The vest stacks on top of that, so it fills the highest brackets rather than starting at the bottom:
| Withheld by your employer at 22.0% | $13,200 |
| Federal tax the vest actually costs | $16,170 |
| Federal shortfall, owed in April | $2,970 |
| Kentucky income tax on the vest | $2,100 |
| Total still to find | $5,070 |
The withholding rate is flat, 22.0% below $1 million of supplemental pay. And takes no account of your salary. That is why the gap grows the more you earn.
The gap widens with salary
| Salary | Withheld | Actually owed | Shortfall | Kentucky tax |
|---|---|---|---|---|
| $90,000 | $13,200 | $13,764 | $564 | $2,100 |
| $160,000 | $13,200 | $14,570 | $1,370 | $2,100 |
| $260,000 | $13,200 | $20,630 | $7,430 | $2,100 |
How Kentucky treats a vest
Kentucky taxes a vest as ordinary income like any other wages, adding $2,100 on top of the federal bill for $60,000 of vesting stock.
If you moved during the vesting period, the income is split between the states you worked in across it: Days worked in each state / total days in vesting period x RSU income = each state's allocation That is worked out day by day, not by where you lived on the vesting date.
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.
What the same vest costs around Kentucky
Total income of $240,000 in the states Kentucky borders:
| State | Its tax | vs Kentucky |
|---|---|---|
| Tennessee | No income tax | −$8,400 |
| Ohio | $5,884 | −$2,516 |
| Indiana | $7,080 | −$1,320 |
| West Virginia | $10,195 | +$1,795 |
| Missouri | $11,350 | +$2,950 |
| Illinois | $11,880 | +$3,480 |
| Virginia | $13,543 | +$5,143 |
- Tennessee has no income tax at all, so the same work done there costs $8,400 less in state tax than it does in Kentucky.
- Ohio would take $2,516 less, $5,884 against Kentucky's $8,400.
- Indiana would take $1,320 less, $7,080 against Kentucky's $8,400.
- West Virginia would take $1,795 more, $10,195 against Kentucky's $8,400.
- Missouri would take $2,950 more, $11,350 against Kentucky's $8,400.
- Illinois would take $3,480 more, $11,880 against Kentucky's $8,400.
- Virginia would take $5,143 more, $13,543 against Kentucky's $8,400.
RSU questions in Kentucky
Should I sell at vest?
Selling immediately raises the cash for the $5,070 you still owe and leaves no capital gain, because the sale price equals the price you were already taxed on. Holding turns it into an investment decision, any further gain is a capital gain, and any fall is a loss you take on shares you were already taxed on at the higher value.
I moved to Kentucky mid-vest, who taxes it?
Both states, split by workdays. The income is allocated across the vesting period, not assigned to wherever you happened to live on the vesting date. The state you left can still claim its share, and California, New York and Massachusetts pursue it hardest.