Updated May 10, 2026
Capital Gains: 3.5%Income Tax: 3.5%Tax Summary
Kentucky taxes cryptocurrency as property following federal guidelines. Capital gains and income from crypto are taxed at the flat state income tax rate of 3.5%. No unique state-level exemptions apply to individual crypto transactions.
Quick facts for Kentucky, United States
Capital Gains Tax
3.5%Income Tax Rate
3.5%Capital Gains Tax
3.5%• Crypto capital gains classified per IRS: short-term as ordinary income, long-term at preferential federal rates.
• Taxed at Kentucky's flat 3.5% income tax rate with no state distinction for holding period.
• No exemptions or thresholds specific to crypto capital gains.
• Report federal AGI including gains on state return.
• Taxed at Kentucky's flat 3.5% income tax rate with no state distinction for holding period.
• No exemptions or thresholds specific to crypto capital gains.
• Report federal AGI including gains on state return.
Income Tax
3.5%• Mining income taxed as ordinary income at 3.5%.
• Staking rewards taxed as ordinary income at 3.5% upon receipt.
• Follows federal treatment with no state-specific rules.
• Included in adjusted gross income for state tax.
• Staking rewards taxed as ordinary income at 3.5% upon receipt.
• Follows federal treatment with no state-specific rules.
• Included in adjusted gross income for state tax.
Reporting Requirements
• Report all crypto transactions on federal forms (e.g., Schedule D, Form 8949); flows to KY AGI.
• File Kentucky Form 740 (individual income tax return).
• Deadline: April 15 (or next business day); extensions available.
• File Kentucky Form 740 (individual income tax return).
• Deadline: April 15 (or next business day); extensions available.
Special Notes
• Sales/use tax exemption for electricity used in commercial crypto mining (>200,000 kWh/month, Form 51A900).
• HB 701 (2025) protects self-custody wallets and blockchain use.
• Conforms to federal IRC through Dec 31, 2025 (HB 757); crypto sales tax treats as cash equivalent.
• HB 701 (2025) protects self-custody wallets and blockchain use.
• Conforms to federal IRC through Dec 31, 2025 (HB 757); crypto sales tax treats as cash equivalent.
Other US States
Compare state-level crypto tax differences across the United States.
Alabama
CG: 2-5%Income: 2-5%
Alaska
CG: 0%Income: 0%
Arizona
CG: 2.5%Income: 2.5%
Arkansas
CG: 0-3.7% (50% deduction on long-term gains)Income: 0-3.7%
California
CG: 1%-13.3%Income: 1%-13.3%
Colorado
CG: 4.4% (flat rate)Income: 4.4% (flat rate)
Connecticut
CG: 2-6.99%Income: 2-6.99%
Delaware
CG: 2.2%-6.6%Income: 2.2%-6.6%
District of Columbia
CG: 4-10.75% (taxed as ordinary income)Income: 4-10.75%
Florida
CG: 0%Income: 0%
Georgia
CG: 5.19%Income: 5.19%
Hawaii
CG: Varies: short-term 1.4-11%, net long-term up to 7.25%Income: 1.4-11%
Idaho
CG: 0-5.3%Income: 0-5.3%
Illinois
CG: 4.95% (flat rate)Income: 4.95% (flat rate)
Indiana
CG: 2.95% state + 0.5%-3% local county (varies)Income: 2.95% state + 0.5%-3% local county (varies)
Iowa
CG: 3.8%Income: 3.8%
Kansas
CG: 5.2%-5.58%Income: 5.2%-5.58%
Louisiana
CG: 3%Income: 3%
Maine
CG: 5.8%-9.15% (taxed as ordinary income)Income: 5.8%-9.15%
Maryland
CG: 2%-6.5% state + 2.25%-3.2% local; +2% surtax on net gains if FAGI >$350,000Income: 2%-6.5% state + 2.25%-3.2% local (varies by county)
Massachusetts
CG: 5% (LTCG), 8.5% (STCG) + 4% surtax >$1,083,150Income: 5% + 4% surtax >$1,083,150
Michigan
CG: 4.25%Income: 4.25%
Minnesota
CG: 5.35%-9.85% (+1% NIIT on net investment income > $1M)Income: 5.35%-9.85%
Mississippi
CG: 0% on first $10,000; 4.4% thereafterIncome: 0% on first $10,000; 4.4% thereafter
Missouri
CG: 0%Income: 2%-4.7%
Montana
CG: Long-term: 3.0%-4.1%; Short-term: 4.7%-5.65%Income: 4.7%-5.65%
Nebraska
CG: 2.46%-4.55% (taxed as ordinary income)Income: 2.46%-4.55%
Nevada
CG: 0%Income: 0%
New Hampshire
CG: 0%Income: 0%
New Jersey
CG: 1.4%-10.75% (as ordinary income)Income: 1.4%-10.75%
New Mexico
CG: 1.5% - 5.9%Income: 1.5% - 5.9%
New York
CG: 4-10.9% (state) + 3.078-3.876% (NYC)Income: 4-10.9% (state) + 3.078-3.876% (NYC)
North Carolina
CG: 3.99% (taxed as ordinary income)Income: 3.99%
North Dakota
CG: Short-term: 0%-2.5%; Long-term: effective 0%-1.5% after 40% exclusionIncome: 0%-2.5%
Ohio
CG: 2.75% (flat on income > $26,050)Income: 2.75% (flat on income > $26,050)
Oklahoma
CG: 0%-4.5%Income: 0%-4.5%
Oregon
CG: 4.75%-9.9%Income: 4.75%-9.9%
Pennsylvania
CG: 3.07% (flat rate)Income: 3.07% (flat rate)
Rhode Island
CG: 3.75%-5.99%Income: 3.75%-5.99%
South Carolina
CG: 1.99%-5.21% (44% deduction for net long-term capital gains)Income: 1.99%-5.21%
South Dakota
CG: 0%Income: 0%
Tennessee
CG: 0%Income: 0%
Texas
CG: 0%Income: 0%
Utah
CG: 4.5%Income: 4.5%
Vermont
CG: 3.35%-8.75%Income: 3.35%-8.75%
Virginia
CG: 2-5.75%Income: 2-5.75%
Washington
CG: 7% on long-term gains exceeding $278,000 (2025 threshold, inflation-adjusted)Income: 0% (no state income tax)
West Virginia
CG: 2.11% - 4.58% (taxed as ordinary income)Income: 2.11% - 4.58%
Wisconsin
CG: 3.5%-7.65% (30% subtraction for long-term)Income: 3.5%-7.65%
Wyoming
CG: 0%Income: 0%
Kentucky Crypto Tax FAQ
Is cryptocurrency taxed in Kentucky?
Kentucky taxes cryptocurrency as property following federal guidelines. Capital gains and income from crypto are taxed at the flat state income tax rate of 3.5%. No unique state-level exemptions apply to individual crypto transactions.
What is the crypto capital gains tax rate in Kentucky?
The state-level capital gains treatment in Kentucky is currently listed as 3.5%.
How do I report crypto taxes in Kentucky?
• Report all crypto transactions on federal forms (e.g., Schedule D, Form 8949); flows to KY AGI.
Compare With Other Countries
Disclaimer: This information is AI-generated and for educational purposes only. Tax laws are complex and subject to change. Always consult with a qualified tax professional for advice specific to your situation.