Kentucky veteran taxes

Military retired pay in Kentucky

Partly exempttax year 2025Sources 1, 2, 3, 4, 5

Kentucky fully exempts the military retired pay of members who retired before January 1, 1998. For members who retired after December 31, 1997, the share of retired pay for service before January 1, 1998 stays excluded and the share for later service is taxable (KRS 141.021 and 141.0215), but the taxable share qualifies for the pension income exclusion of up to $31,110 per taxpayer for tax year 2025, shared with all other pension and retirement income (KRS 141.019; Schedule P).

Survivor Benefit Plan annuities

Check with the stateSources 6, 2

The Department of Revenue’s 2025 Form 740 instructions and military pages do not name Survivor Benefit Plan annuities. The pension income exclusion of up to $31,110 covers all pension and retirement income paid under a written retirement plan, including annuities and death benefits, but no source read says how the pre-1998 service rule for federal and military retirement applies to a survivor’s annuity.

Property tax relief for disabled veterans

Exemption or creditSources 7, 8

Kentucky’s homestead exemption, which is not limited to veterans, reduces the assessed value of the home of an owner who is age 65 or older or has been classified as totally disabled under a federal program or retirement system and receives disability payments; the exemption for the 2025-2026 assessment years is $49,100 (Ky. Const. § 170; KRS 132.810). A veteran with a service-connected total disability documents it when applying and does not have to reapply each year. Applications go to the property valuation administrator of the county.

• Only one exemption per residential unit, even if the owner is both 65 or older and totally disabled.
• Disabled applicants under 65 must otherwise reapply each year and keep the disability classification for the whole taxation period.

Vehicle registration for disabled veterans

Fee waiver or discountSources 9, 10, 11

Under KRS 186.162(2)(a), the Disabled Veteran special plate has an initial and renewal fee of $0, with no county clerk fee, for veterans declared 100% service-connected disabled by the VA and for disabled veterans who received VA assistance to buy a vehicle; the Department of Veterans Affairs calls it the Disabled Veteran license plate (no fee). Veterans rated 50% to 99% service-connected disabled pay the regular military plate fee ($23 initial and renewal, including a $5 share for the veterans’ program trust fund).

• From January 1, 2027 (2026 Ky. Acts ch. 135), the 50% to 99% plate fee is listed as $17 ($12 state share and $5 trust fund share) plus the county clerk’s fee, which applicants pay unless the statute says otherwise; the 100% and VA-assisted plates stay at $0 with no county clerk fee.
• Disabled veterans’ plates expire on July 31 (KRS 186.041(2)); the statutes read do not state whether the basic registration fee in KRS 186.050 is also waived.