The left-back, who joined the Clarets from Leeds United in the summer of 2017, is now ready to build on an impressive start to life in the top flight.
Taylor, 26, said: “I'm delighted. I feel it's a very stable club. It's been in the Premier League now for a few years.
“I've thoroughly enjoyed my time here so far and I'm looking forward to the next few years ahead.
“The next few years are hopefully the peak years of my career. I've signed up to Burnley to spend them here and hopefully the best years are to come.
“Ever since I made my debut in the Premier League I've wanted to stay here. I think once you have a taste of the Premier League you don't want to go anywhere else.
“We have been in the Premier League since I arrived and that's where I want to stay."