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Active Duty Pay Untaxed; Pensions Through the Exclusion

Kentucky does not tax active-duty military pay at all, and military pensions run through the general $31,110 pension exclusion, with Schedule P reaching further for service before 1998. There is no separate military pension exclusion beyond that. For a member killed in the line of duty the treatment is different again: all income from all sources, including federal and state death benefits, is excluded.

Verified August 25, 2026

What this benefit is

Kentucky does not tax active-duty military pay at all, and military pensions run through the general $31,110 pension exclusion, with Schedule P reaching further for service before 1998. There is no separate military pension exclusion beyond that. For a member killed in the line of duty the treatment is different again: all income from all sources, including federal and state death benefits, is excluded.

What it's worth: Active-duty pay fully excluded; pensions through the $31,110 exclusion and Schedule P

  • The saving is your marginal state rate on the amount excluded, so it depends on your bracket.
  • There is no military-specific pension exclusion. Military pensions use the same $31,110 general pension exclusion as any other pension, under KRS 141.019(1)(g).
  • Active-duty pay is excluded in full under KRS 141.019(1)(l).
  • KRS 141.019(1)(k) excludes all income from all sources, including federal and state death benefits, for a member killed in the line of duty.

Who is entitled to it

  • You receive military retired pay.
  • Your home is in this state.

Not sure whether that describes you?

Answer a few questions about this benefit specifically — we only ask what this one actually depends on, and we stop as soon as we know.

How to claim it

Deadline: With your return
  1. 1Active duty: exclude all military compensation on the Kentucky return — the National Guard and reserves count as Armed Forces here.
  2. 2Retirees: take the $31,110 pension exclusion, and run Schedule P where the federal pension exceeds it — the exempt percentage can reach well past the flat figure.
  3. 3Ask the Department about the reported temporary full military-pension exclusion before assuming either way — see the note.
File with
The state revenue department, on your annual return
Annual
Claimed once a year.
Known gapLegislative materials report a temporary FULL exclusion of military pension distributions (tax years 2022 through 2026, then 2026 through 2030 adding the National Guard). The Department of Revenue’s own military page describes only the $31,110 exclusion and Schedule P, and the statute PDF would not yield the passage — so this record publishes what the administering agency states and flags the rest for confirmation rather than promising it.

Sources

Why only one source type: The Department of Revenue's military page states the active-duty exclusion, the $31,110 pension exclusion and the Schedule P route in terms. Reports of a temporary FULL military-pension exclusion for 2022-2030 trace to bill texts we could not read cleanly, and the DOR page does not carry it — the gap note says so.

This finder provides an informational match, not a government eligibility determination. The responsible agency decides your application.