State retirement tax · Kentucky
Retirement tax rules for Kentucky residents (2026 guide)
Kentucky's effective income-tax rate at retirement-bracket income is approximately 3.50%. Here's what it taxes, what it exempts, and how the worked numbers shake out.
Last reviewed July 17, 2026
Editorial review pending — see editorial process
Rate on retirement income
1.12%*
Taxes Social Security?
No
Approx. tax on $90k retirement income
$1,011
Pension carve-outs
Yes
*Effective rate for a single filer with $90k of income ($30k of it Social Security), after Kentucky exempts Social Security and excludes the first $31,110 of retirement income per person. A retiree whose withdrawals stay under the exclusion owes about $0; a married couple excludes roughly twice as much. See the note below for the age rules.
Kentucky's headline income-tax rate is about 3.50%, but retirees rarely pay it on their full income. Kentucky excludes the first $31,110 of retirement income per person, and Social Security is fully exempt — so a retiree whose withdrawals stay under that exclusion owes close to $0, and one above it pays the rate only on the excess. A married couple can exclude roughly twice as much. The state note below has the age rules and exactly what qualifies.
What Kentucky taxes (and what it doesn’t)
Kentucky taxes 401(k)/IRA withdrawals and pension income at the state's rate — but only AFTER excluding the first $31,110 of retirement income per person, and Social Security is fully exempt. So a retiree whose taxable withdrawals fall under the exclusion pays $0 in state income tax; above it, the roughly 3.50% rate applies to the excess. Taxable brokerage, rental, and wage income don't qualify for the exclusion. See the state note for the age requirement and specifics.
State-specific note
Flat 3.5% (2026; was 4.0%). Kentucky excludes up to $31,110 of retirement income PER PERSON — pensions, IRA/401(k), and Roth conversions — so a retiree with modest withdrawals owes little or nothing. Social Security is fully exempt. Income above the per-person cap is taxed at 3.5%.
A worked example
Worked example. A Kentucky retiree with $60,000 of pension and IRA withdrawals plus $30,000 of Social Security: Social Security is exempt, and Kentucky excludes the first $31,110 of retirement income per person — so only about $28,890 is taxed at roughly 3.50%, on the order of $1,011/year ($84/month). A married couple can exclude about twice as much, often owing $0.
Should you relocate?
Whether to relocate from Kentucky for tax reasons depends on the size of your retirement income and the destination state. The math typically favors staying put unless you're at $1M+ household income or planning a 20+ year retirement that amortises the move costs.
See how Kentucky state tax shapes your retirement plan
The calculator's Taxes tab uses the 3.50% effective rate above and the SS-exemption flag automatically. Run your specific numbers and see the year-by-year tax forecast.
Run my numbersFrequently asked
Does Kentucky tax my Social Security?
No. Kentucky fully exempts Social Security benefits. You'll only owe state tax on other retirement income above the exclusion described below.
How much retirement income can I exclude in Kentucky?
Up to $31,110 per person — about $62,220 for a married couple where both qualify. It covers pension and IRA/401(k) income; see the state note above for the age requirement and exactly what counts. Income above the exclusion is taxed at about 3.50%.
What's the effective state tax rate on my retirement income in Kentucky?
Much lower than the headline rate for most retirees. On $90,000 of income (with $30,000 of it Social Security), a single filer would owe roughly $1,011 — an effective rate of about 1.12% — because Social Security is exempt and the first $31,110 of other retirement income is excluded. A retiree whose withdrawals stay under the exclusion owes $0.
Should I relocate to Kentucky for retirement?
It depends on the size of your retirement income, the destination state, and your moving costs — the state-tax differential alone is rarely decisive for normal-income retirees. Kentucky's exclusion already zeroes out state income tax for many retirees, so property and sales taxes are usually the numbers that actually differ between states.
Does this apply to property tax too?
No — this page covers state INCOME tax only. Property and sales taxes vary widely and property tax is set locally; check your county assessor for your own number.
Primary sources
Kentucky-specific rules are sourced from the state revenue department's own publications (listed first); the rate table below is cross-checked against the national roundups. We re-verify annually.
Related reading
Arkansas retirement tax rules
Comparable effective rate on retirement income (3.90% vs 3.50%).
Alaska retirement tax rules
For perspective from a different tax tier.
Utah retirement tax rules
An example of a state that DOES tax Social Security.
Run my numbers
The calculator's Taxes tab uses the same per-state effective rate.
How the Monte Carlo actually works
2,000-word methodology page — covers state tax modelling.