Does Kentucky tax Social Security benefits?

No. Kentucky fully exempts Social Security benefits from state income tax, regardless of your income level. None of your Social Security is added to Kentucky taxable income.

What is the Kentucky pension income exclusion?

Kentucky lets each taxpayer exclude up to $31,110 of pension, annuity, IRA, and 401(k) distribution income per year. On a joint return each spouse gets their own $31,110, so a couple can exclude up to $62,220 of qualifying retirement income.

Are 401(k) and IRA withdrawals taxed in Kentucky?

They are taxable, but only to the extent they exceed the $31,110 per-person exclusion. Up to $31,110 of combined pension, annuity, and retirement-account distributions is excluded; anything above that is taxed at Kentucky's flat 4.0% rate.

Are government and military pensions treated differently?

Kentucky service earned before January 1, 1998 can qualify for a larger or full exemption for state, local, and federal government and military pensions. This simplified calculator applies the standard $31,110 exclusion; retirees with pre-1998 service should use the Schedule P worksheet for a potentially larger exclusion.

What rate does Kentucky use on taxable retirement income?

Kentucky taxes the portion of retirement income above the exclusion at its flat individual income-tax rate, which is 4.0% for the 2024 tax year. The same flat rate applies to all taxable income, so there is no special retiree bracket.

Kentucky Retirement Income Tax Calculator

Email me this result

Get this tool's output sent to your inbox, plus one useful tool a week. No spam, unsubscribe any time.

Kentucky is relatively friendly to retirees: Social Security is completely exempt, and each person can exclude up to 31,110 dollars of pension, annuity, IRA, and 401(k) income. This calculator applies those rules and taxes only the remaining retirement income at Kentucky’s flat 4.0 percent rate.

How it works

Kentucky removes Social Security entirely from the state return. For other retirement income — pensions, annuities, and IRA/401(k) distributions — it grants a per-person exclusion of 31,110 dollars, then taxes the rest at the flat rate:

SS taxable          = 0  (fully exempt)
excludable income   = pension + annuity + IRA/401(k) withdrawals
taxable retirement  = max(0, excludable income − $31,110 per person)
KY tax              = taxable retirement × 0.04

On a joint return each spouse claims their own 31,110 dollar exclusion, so a couple can shelter up to 62,220 dollars of qualifying retirement income before any Kentucky tax applies.

Example

A single retiree receives 24,000 dollars of Social Security, a 30,000 dollar pension, and 20,000 dollars of 401(k) withdrawals. Social Security is exempt. The pension plus withdrawals total 50,000 dollars; after the 31,110 dollar exclusion, 18,890 dollars is taxable. Kentucky tax is 18,890 × 0.04 = about 756 dollars.

Notes

Estimate only, not tax advice. This tool applies the standard 31,110 dollar exclusion (per person) and Kentucky’s flat 4.0 percent rate. Retirees with government, military, or other service earned before January 1, 1998 may qualify for a larger exclusion via the Kentucky Schedule P worksheet, which this simplified calculator does not compute. Confirm with Kentucky Form 740 and Schedule P at revenue.ky.gov.