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Kentucky has enacted widespread reforms to tax code policy in recent years, improving the state’s position ranking in the Tax Foundation’s 2024 State Business Tax Climate Index to 18th, up from 33rd in 2018. In 2022, the state introduced a framework to reduce and eventually eliminate the personal income tax rate, now at 3.5% for 2026 with additional triggers in place to reduce further. Other reforms in recent years include the repeal of the corporate license tax and the intangible property tax, as well as a reduction in the corporate income tax rate from 8.25% to the current 5%. In 2023, the state created a pass-through entity tax and credit that will reduce federal tax liability for businesses. See more information for Kentucky tax rates and collections.
Indiana ranks 10th in the Tax Foundation’s 2024 Business Tax Climate Index. Indiana has made several tax reforms to maintain their ranking in the top 10, including reducing the corporate income tax rate from 6.25% to 4.90% and reducing the personal income tax rate to 3.15% to 2.95% in 2026 as part of an acceleration of income tax cuts passed in 2022, with additional triggers in place to reduce further though 2029. See more information for Indiana tax rates and collections.