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.
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Apply directly through the official Kentucky agency.
About this benefit
Eligibility
Veterans receiving VA disability compensation, DIC benefits, or military disability retirement pay for service-connected injury/sickness.
Covers
These payments are fully excluded from Kentucky taxable income.
How to apply
Excluded when filing Kentucky income tax return.
Verified against official source
Last checked 2026-05-05 against revenue.ky.gov. Always confirm current rates and rules with the Kentucky state agency before applying.
Other Kentucky Tax Benefits
Active Duty Military Pay Income Tax Exclusion
All active duty military pay is 100% exempt from Kentucky state income tax.
Military Retirement Pay Income Tax Exclusion
Up to $31,110 per year of military retirement pay excluded from Kentucky state income tax.
Up to $31,110 income exclusion
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)
Exemption from state property tax on up to two motor vehicles for 100% disabled veterans.
Up to $225/year for two vehicles
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