Retiring in Kentucky: how your income is taxed
Kentucky is fairly tax-friendly for retirees. On a typical retirement income it ranks #23 of 51 for the lowest state income tax.
The rules in Kentucky
- Social Security: Kentucky fully excludes Social Security and Railroad Retirement Tier 1 benefits.
- Pensions: Each person can exclude up to $31,110 a year of pension and retirement income combined, at any age, including pensions, annuities, IRAs and 401(k)s. Married couples each get their own limit. Government pensions for service before 1998 can exclude more (Schedule P). The $31,110 limit has not changed since 2018. Military retirement: the part for service before 1998 is fully excluded; later service falls under the $31,110 limit.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals (including Roth conversions) share the same $31,110-per-person exclusion as pensions.
- At 65 and older: Each filer 65 or older gets a $40 tax credit.
Calculate your Kentucky retirement taxes
State income tax in Kentucky: $154 a year
In Kentucky, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In Kentucky you'd pay about $154 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,510 (6.4% total).
Kentucky ranks #23 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Kentucky
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $154 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $2,254 | $1,125 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply Kentucky's main exclusions and may differ for income-tested credits.
States with lower retirement taxes
Moving to Kentucky in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Kentucky come from (IRS migration data, 2022–2023).
- Ohio to Kentucky
- Tennessee to Kentucky
- Indiana to Kentucky
- Florida to Kentucky
- Texas to Kentucky
- California to Kentucky
Frequently asked questions
Does Kentucky tax Social Security?
Not taxed. Kentucky fully excludes Social Security and Railroad Retirement Tier 1 benefits.
Does Kentucky tax pensions?
Partly taxed. Each person can exclude up to $31,110 a year of pension and retirement income combined, at any age, including pensions, annuities, IRAs and 401(k)s. Married couples each get their own limit. Government pensions for service before 1998 can exclude more (Schedule P). The $31,110 limit has not changed since 2018. Military retirement: the part for service before 1998 is fully excluded; later service falls under the $31,110 limit.
Does Kentucky tax 401(k) and IRA withdrawals?
Partly taxed. 401(k) and IRA withdrawals (including Roth conversions) share the same $31,110-per-person exclusion as pensions.
Is Kentucky a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, Kentucky charges about $154 in state income tax, ranking #23 of 51 (lowest tax first).
Related
Sources: revenue.ky.gov, revenue.ky.gov (2), moaa.org. Rules reviewed . Some 2026 amounts were not yet published or sources differed; confirm with the state revenue department.