Does KY Tax Military Retirement?
In the United States, military retirement is a significant source of income for veterans and their families. Kentucky, like many other states, has specific tax laws regarding military retirement income. This article aims to explore whether Kentucky taxes military retirement and the details surrounding this matter.
Understanding Kentucky’s Taxation Policies on Military Retirement
Yes, Kentucky does tax military retirement income. However, the state provides certain exemptions for military personnel and their families. According to Kentucky Revised Statutes, military retirement income is subject to state income tax unless it is exempted under specific provisions.
Exemptions for Military Retirement Income in Kentucky
1. 100% Exemption for Retired Military Personnel: Kentucky offers a 100% exemption for military retirement income for those who retired before January 1, 1990. This means that military retirement income received by individuals who retired prior to this date is not subject to state income tax.
2. 50% Exemption for Retired Military Personnel: For those who retired on or after January 1, 1990, Kentucky provides a 50% exemption on military retirement income. This means that only half of the military retirement income is subject to state income tax.
3. Survivor’s Benefit: Kentucky also offers a 100% exemption on survivor’s benefit income received by the surviving spouse of a military retiree.
Reporting Military Retirement Income on Kentucky Tax Returns
If you are a military retiree or receiving survivor’s benefits, you must report your military retirement income on your Kentucky state tax return. For those who retired before January 1, 1990, you will not need to include your military retirement income on your return since it is exempt from state income tax. However, if you retired on or after January 1, 1990, you must report 50% of your military retirement income.
Conclusion
In conclusion, Kentucky does tax military retirement income, but it provides certain exemptions for military personnel and their families. Understanding these exemptions and reporting your military retirement income correctly on your state tax return is crucial to ensure compliance with Kentucky’s tax laws. It is advisable to consult with a tax professional or the Kentucky Department of Revenue for specific guidance on your individual situation.
