Is my Military Pension/Retirement Income Taxable to Kentucky?

According to the Kentucky Department of Revenue, your military retirement income may not be taxable, depending on your total income. 

This subtraction is manually calculated on the Schedule P worksheet to be entered into your Kentucky return. You will have to manually enter this exclusion by going to:

1. State Section
2. Edit the Kentucky state return 
3. Retirement Income (Schedule P Part 1 Only) 

Exclusion

Kentucky allows a pension income exclusion of up to $31,110 for retirement income included in your federal adjusted gross income. Complete the Schedule P worksheet to determine the 'Exempt Percentage' required in the program. 

Examples:

1. If you receive $25,000 in taxable military retirement income, it is not taxable in Kentucky. Enter the subtraction on Schedule M.
2. It is partially taxable if you receive $52,000 in taxable military retirement income. You must complete Schedule P to determine how much is exempt.

Schedule P Worksheet

Important Notes:

• If you retired before January 1, 1998, your pension may be fully exempt.
• If you retired after January 1, 1998, you may still qualify for a higher exemption if you retired from:
  • The federal government
  • The Commonwealth of Kentucky
  • A Kentucky local government

Use the Schedule P worksheet or calculator to determine your exempt percentage