In the state of Kentucky if i win the lottery is it considered income?

YES it is taxable income. And you already know that it is taxable income that you will have to report on your federal 1040 income tax return and added the amount to all of your other gross income and the amount will be subject to the federal income tax in the year that they are received at your marginal tax rates.

For 2009 and 2010 the marginal tax rate on the federal 1040 income tax return is 10% to the Maximum 35% rate.

And of course you could also have some state income taxes to pay on the lottery winnings amount.