Military retirement pay in Kentucky
Varies
Does Kentucky Tax Military Retirement Pay?
Short answer: Partly. Kentucky lets each person exclude up to $31,110 of pension income, including military retired pay. Retirees who retired before Jan. 1, 1998 are fully exempt, and later retirees can exclude more based on their service before 1998 (Kentucky Schedule P). HB 192 (2025), which would have fully exempted military pensions and SBP from 2026, died in committee. HB 183 (2026) would raise the general exclusion to $41,110 from 2027 but had not passed when we checked. Other retirement income: Each taxpayer may exclude up to $31,110 of pension, annuity, and 401(k)/IRA income.
Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Military retirement pay in Kentucky
Varies
Individuals / Personal Taxes
Partly. Kentucky lets each person exclude up to $31,110 of pension income, including military retired pay. Retirees who retired before Jan. 1, 1998 are fully exempt, and later retirees can exclude more based on their service before 1998 (Kentucky Schedule P). HB 192 (2025), which would have fully exempted military pensions and SBP from 2026, died in committee. HB 183 (2026) would raise the general exclusion to $41,110 from 2027 but had not passed when we checked. Other retirement income: Each taxpayer may exclude up to $31,110 of pension, annuity, and 401(k)/IRA income.
Business justification
Partly. Kentucky lets each person exclude up to $31,110 of pension income, including military retired pay. Retirees who retired before Jan. 1, 1998 are fully exempt, and later retirees can exclude more based on their service before 1998 (Kentucky Schedule P). HB 192 (2025), which would have fully exempted military pensions and SBP from 2026, died in committee. HB 183 (2026) would raise the general exclusion to $41,110 from 2027 but had not passed when we checked. Other retirement income: Each taxpayer may exclude up to $31,110 of pension, annuity, and 401(k)/IRA income. Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Category
- Personal Tax Deductions