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Kentucky Retirement Income Tax Calculator

Kentucky exempts Social Security and $31,110 of pension or IRA income per owner; the 2026 rate is 3.5%.

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Kentucky resident retirement worksheet

Use the year income is received, not the filing year. Later years use a separately approved assessment until the next return rules are verified.

Prepared positive Kentucky income after contribution basis and all other state modifications, before only the benefits / pension exclusions shown below. Approve actual filing method, income ownership and written-plan classification. Combined filing requires both spouses to have income and each owner’s deductions / credits. No unresolved part-year / nonresident allocation, income losses, farm averaging or special lump-sum tax.

Kentucky single covers the qualifying federal head-of-household / widow categories described by Form 740. Joint filing pools approved owner amounts with one standard deduction. Eligible combined filing has separate owner income and deductions. If one spouse itemizes, the other must itemize. Changing status does not approve allocation or restore a previously valid credit.

After approved current-year Kentucky modifications and contribution basis; includes your taxable benefit / retirement subsets entered below. This is not gross cash income or federal taxable income.

Only the amount included in prepared income above; not gross benefits. Supplemental railroad Tier 2 goes in its separate field.

Approved written-plan retirement after Kentucky basis, including the public-service subset below. Exclude railroad Tier 2 from this field. Qualifying taxable Roth conversions and disability / deferred-compensation income need actual classification; do not assume every payment is fully exempt.

Schedule P Part I amount from eligible federal, Kentucky state or Kentucky local government pension / disability retirement. Obtain the system’s approved service percentage or exempt amount. Deferred compensation is not Part I. This must be a subset of the retirement amount above; the remaining eligible plans share one $31,110 owner allowance.

Separate approved included Tier 2 amount fully exempt on Schedule P. Do not include it again in Social Security / equivalent benefits or other retirement fields.

Verified 2026 standard deduction $3,360. Joint filing receives one deduction; eligible combined filing gives each owner a separate approved deduction. Prepared itemized amounts must meet current Kentucky limits, including the 2026 principal-residence interest restriction. Federal extra senior, tips, overtime or vehicle-interest deductions are not automatically Kentucky deductions.

Approved separate owner income after state basis and other current-year modifications.

Included taxable subset, not gross benefits; supplemental Tier 2 is separate.

This owner’s approved written-plan retirement after basis, excluding railroad Tier 2.

Separately approved Schedule P Part I service amount; cannot exceed this owner’s included plan retirement. An unused $31,110 cap cannot be lent to the other spouse.

Separate approved included supplemental benefit, without double counting in other fields.

Prepare actual current-year allowed credits after all ordering and limits. Joint filing uses an approved return total; combined filing uses your owner amount. Blank preserves before-credit tax. Withholding, payments and refundable credits stay separate.

Kentucky · 2026 estimate

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Kentucky 2026 ordinary estimate before credits —
Your approved pension / Tier 2 exclusion
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Spouse’s approved pension / Tier 2 exclusion
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Included Social Security / equivalent benefits excluded
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Total owner pension / Tier 2 exclusions
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Modeled Kentucky adjusted income
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Your taxable column / joint taxable income
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Spouse’s combined-return taxable column
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Nonnegative taxable income used for the estimate
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Estimate after approved nonrefundable credits
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Calculation scopeConfirm full-year resident scope, owner retirement classification and current-year deductions

Illustrative defaults. Enter approved taxable amounts and confirm eligibility. The result covers the displayed worksheet conditions; a complete return may require other income, adjustments, deductions or credits.

Verified 2026 estimate: 3.5% rate and $3,360 standard deduction. Current KRS 141.019 and published Schedule P retain the $31,110 owner pension allowance after approved fully exempt benefits. Resident booklet supplies continuing filing conditions; prepared current-year state basis, deductions and credits remain required. Reviewed October 2, 2026.

Reviewed October 2, 2026. Kentucky retirement tax in 2026: owner pension caps, pre-1998 service and the 3.5% rate

What Kentucky taxes in retirement

Partly taxed: limits by age, plan, owner or income apply. Military retirement is covered in the guide. How these labels work.

Kentucky retirement tax in 2026: owner pension caps, pre-1998 service and the 3.5% rate

Estimate Kentucky’s 2026 retirement tax with separate $31,110 pension allowances, approved pre-1998 public-service exclusions and correct owner deductions.

Kentucky’s actual 2026 estimated-tax worksheet specifies a 3.5% ordinary rate and a $3,360 standard deduction. Current KRS 141.020 independently confirms the rate. The generic income-tax hub’s 4% statement and the resident booklet’s $3,270 deduction describe 2025; they are not used as 2026 figures. Even the estimate PDF has 2025 in its filename while its contents explicitly cover 2026. Check the document’s tax year before comparing retirement scenarios.

Current KRS 141.019 retains a pension allowance of up to $31,110 for each taxpayer. Published Schedule P requires spouses to calculate their exclusions independently, regardless of filing status. Eligible written-plan income can include pensions, IRA / 401(k) distributions, taxable Roth conversions, disability retirement and deferred compensation when the actual payment qualifies. Multiple accounts do not create multiple allowances. A spouse with only $15,000 of eligible retirement excludes $15,000 and cannot lend the unused $16,110 to an owner with a larger distribution.

Schedule P Part I treats approved federal, Kentucky state and Kentucky local government pension amounts attributable to pre-January 1, 1998 service separately from the capped remaining retirement. Prepare the system’s exempt amount or service percentage for each pension. A retirement after 1997 can contain both service periods. Retain purchased-service, sick-leave and air-time records used by the actual worksheet. Deferred compensation is not Part I. Do not classify another state’s government pension or all military retirement as fully exempt merely because it is public retirement.

Included supplemental railroad Tier 2 benefits receive their own fully exempt Schedule P treatment. Social Security and equivalent railroad benefits included in income are excluded separately. Keep Tier 2 outside both the equivalent-benefit field and the other-plan field so it is removed once. The displayed prepared income must include every benefit or retirement subset entered here, after state contribution-basis reconciliation and other current-year modifications. Gross benefit receipts and federal taxable income are different starting amounts.

For an approved joint illustration, your prepared Kentucky income is $85,000, including $10,000 taxable Social Security and $55,000 qualifying plan retirement. Of that plan income, $20,000 is an approved pre-1998 public-service exemption. The remaining $35,000 uses the $31,110 allowance, giving a $51,110 pension exclusion. A spouse’s $20,000 prepared income contains $5,000 included benefits and $15,000 eligible retirement, both excluded. Adjusted Kentucky income is $23,890. One approved $3,360 joint standard deduction leaves $20,530 taxable, or a $718.55 ordinary estimate before credits; an independently approved $80 credit leaves $638.55.

Kentucky joint filing pools income in one column and allows one standard deduction. Eligible married separate filing on a combined return uses each owner’s income and deduction; both spouses must have income. If the example spouse instead has $30,000 prepared income, the joint estimate is $1,068.55. With separately approved combined-return deductions of $3,360 each, the taxable columns are $20,530 and $6,640, producing $950.95 before credits. Each owner must approve their own credit limitations. If one spouse itemizes, the other must itemize. Eligible federal head-of-household and widow categories use Kentucky’s single method as described by Form 740.

Current KRS 141.019 includes July 2026 amendments. Prepare the resulting Kentucky modifications and deduction restrictions rather than copying a federal total: for example, the 2026 qualified-residence interest provision restricts the Kentucky deduction to the principal residence. Federal extra senior, tips, overtime and vehicle-interest deductions are not automatic state deductions. Approved nonrefundable credits must reflect actual current-year eligibility, ordering and limits; a blank owner credit leaves the after-credit result unresolved. This cent estimate does not prepare special lump-sum tax, farm averaging, refundable credits, withholding or payment settlement. Use the prepared-liability option for unresolved basis, plan or source allocation and other unsupported return conditions.

Prepare these Kentucky records

Official Kentucky source. Current KRS 141.019 / 141.020 including 2026 enactments; verified 2026 estimated-tax worksheet; published 2025 Schedule P and resident filing instructions.

Calculate the federal portion separately

Use the federal retirement-tax worksheet to prepare federally included benefits and ordinary income. Its federal deduction and rates do not replace the Kentucky rules above.

Compare Kentucky with nearby states

Kentucky borders 7 states; these 6 treat Social Security, pensions, IRA withdrawals and wages most like Kentucky does. Run each one’s worksheet with the same household figures before deciding where a move would leave you.

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Updated / verified · Retirement Income Tax Calculator Editorial Team