Kentucky Tax Interest Rate Updated for 2026

revenue.ky.gov

Published January 1st, 2026

Detected March 17th, 2026

Summary

The Kentucky Department of Revenue has established the tax interest rate for 2026 at 7%, a decrease from the previous year. This rate applies to tax liabilities and overpayments, with specific rates for underpayments (9%) and overpayments (5%) also detailed.

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What changed

The Kentucky Department of Revenue has announced the annual tax interest rate, which will be 7% effective January 1, 2026. This rate represents a decrease from the 2025 rate. The notice also reiterates the statutory interest rates for tax liabilities (9%) and overpayments (5%) as per KRS 131.183.

Regulated entities and taxpayers in Kentucky should be aware of the updated interest rate for tax liabilities and overpayments beginning in 2026. While the primary rate is set at 7%, the specific rates for underpayments (9%) and overpayments (5%) remain in effect. No immediate action is required from taxpayers as this is an annual adjustment, but it impacts the calculation of interest on outstanding tax balances.

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Tax Interest Rate Update for 01-01-26

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Tax Interest Rate Update for 01-01-26

Tax Interest Rate Update for 01-01-26

State law mandates that the Commissioner of the Department of Revenue annually review the interest rate charged on all tax liabilities, making any required changes. Commissioner Thomas B. Miller has established the Tax Interest Rate effective January 1, 2026, to be 7 %, which is a decrease from the rate for 2025. Therefore, the taxes payable to the Commonwealth that have not been paid at the time prescribed by statute will accrue interest at the rate of 9 % pursuant to KRS 131.183(2)(a)2. Likewise, interest allowed and payable upon any overpayment will accrue interest at the rate of 5 % pursuant to KRS 131.183(2)(b)2.