Active Duty Military Pay Income Tax Exclusion
All active duty military pay is 100% exempt from Kentucky state income tax.
At a glance
- Benefit type
- Tax Benefits — Kentucky
- Who it's for
- Active Duty, National Guard, Reservists
- VA rating needed
- No rating requirement
- Where it applies
- Kentucky
- Last verified
- May 12, 2026
What is Active Duty Military Pay Income Tax Exclusion?
Active Duty Military Pay Income Tax Exclusion is a Kentucky tax benefits benefit for active duty, national guard, reservists. All active duty military pay is 100% exempt from Kentucky state income tax.
Who qualifies
- Through veteran sponsor (any rating)
- Kentucky residency
Who is eligible
Eligibility
All active duty service members earning military pay. No disability or discharge requirement.
What Active Duty Military Pay Income Tax Exclusion covers
Covers
100% of active duty military pay is exempt from Kentucky state income tax. Value depends on pay grade.
How to apply for Active Duty Military Pay Income Tax Exclusion
How to apply
Claimed when filing Kentucky income tax return (Schedule M).
Verified information & sources
Last verified: May 12, 2026
Official source: revenue.ky.gov
Compiled and fact-checked against the official source linked above. Benefit rules and dollar amounts change over time — always confirm current details at the official source before applying. A county Veterans Service Officer (VSO) is a free, accredited advocate who can review your eligibility and help you file at no cost.
Frequently asked questions about Active Duty Military Pay Income Tax Exclusion
Who qualifies for Active Duty Military Pay Income Tax Exclusion?▾
How do I apply for Active Duty Military Pay Income Tax Exclusion?▾
Where can I verify Active Duty Military Pay Income Tax Exclusion?▾
Other Kentucky Tax Benefits
Military Retirement Pay Income Tax Exclusion
Up to $31,110 per year of pension/retirement income (including military retirement pay) excluded from Kentucky state income tax; military retirees with pensions exceeding $31,110 may exclude additional amounts via Schedule P based on pre/post-1998 service.
Up to $31,110 income exclusion (general pension exclusion; more available via Schedule P)
VA Disability and Military Disability Retirement Pay Tax Exclusion
VA disability compensation, DIC, and military disability retirement pay are fully excluded from Kentucky income tax.
Homestead Property Tax Exemption (100% Disabled)
$49,100 deducted from assessed home value for 100% disabled veterans, saving approximately $490-$590/year.
$490-$590/year in property tax savings
Motor Vehicle Property Tax Exemption (100% Disabled) - PROPOSED, NOT ENACTED
Proposed exemption from state property tax on up to two motor vehicles for 100% disabled veterans. NOT currently law — the 2023 bill (HB25) died in committee.
Not currently available (proposed legislation did not pass)
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