Kentucky

Kentucky adopted the Uniform Disposition of Community Property Rights at Death Act (KRS 391.210 to 391.260)

“KRS 391.210 to 391.260 may be cited as the Uniform Disposition of Community Property Rights at Death Act.”

Note: Chapter 391 ('Descent and Distribution') carries the Act as KRS 391.210 to 391.260, 'Disposition of Community Property Rights at Death', live and unrepealed. Preserves the community-property character of assets a couple brings from a community property state.

Kentucky spouses may opt in to community property treatment by creating a community property trust

“Whether or not both, one (1), or neither spouse is domiciled in this state, spouses may classify any or all of their property as community property by transferring property to a community property trust and providing in the trust that the property is community property.”

Note: Official KRS PDF. Statute created by 2020 Ky. Acts ch. 25, sec. 2, effective July 15, 2020; part of KRS 386.620 to 386.624. Quote is subsection (5), verbatim from the fetched PDF.

Kentucky individual income tax rate is 4.0% for TY2025 (3.5% TY2026)

“A tax is imposed upon the Kentucky adjusted gross income of every resident individual for each taxable year at the rate of four percent (4%).”

Note: Rate falls to 3.5% for TY2026 (HB 1 enacted). Fixed-date IRC conformity 12/31/2024 (no §1211/§1212 effect). Kentucky local taxes reach wages only, not investment income.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

KY taxes out-of-state muni bond interest; KY bonds exempt KRS §141.019(1)(c)

“Exclude income that is exempt from state taxation by the Kentucky Constitution and the Constitution and statutory laws of the United States; ... Include interest income derived from obligations of sister states and political subdivisions thereof;”

Note: KRS §141.019(1)(a) excludes interest exempt under federal and Kentucky law (Kentucky bonds), while §141.019(1)(c) includes interest from obligations of sister states, so out-of-state muni interest is taxed and Kentucky bonds are exempt. Quote verbatim from the live KRS statute PDF (fetched via curl).

KY taxes out-of-state muni bond interest; KY bonds exempt KRS §141.019(1)(c)

“Exclude income that is exempt from state taxation by the Kentucky Constitution and the Constitution and statutory laws of the United States; ... Include interest income derived from obligations of sister states and political subdivisions thereof;”

Note: KRS §141.019(1)(a) excludes interest exempt under federal and Kentucky law (Kentucky bonds), while §141.019(1)(c) includes interest from obligations of sister states, so out-of-state muni interest is taxed and Kentucky bonds are exempt. Quote verbatim from the live KRS statute PDF (fetched via curl).

Kentucky conforms to IRC §1400Z-2 QOZ gain deferral and exclusion

“"Internal Revenue Code" means the Internal Revenue Code in effect on December 31, 2024, with the exceptions, additions, and limitations provided in this chapter.”

Note: Kentucky HB 757 (2026) updated IRC conformity to incorporate §1400Z-2.

Kentucky conforms to IRC §1202 QSBS gain exclusion via rolling IRC conformity

“"Internal Revenue Code" means the Internal Revenue Code in effect on December 31, 2024, with the exceptions, additions, and limitations provided in this chapter.”

Note: Kentucky IRC conformity incorporates §1202; no addback.

Kentucky subtraction for U.S. obligation interest requires exemption from state taxation under federal law; FNMA and FHLMC have no such federal bondholder exemption

“Interest income from United States government obligations shall be excluded from gross income only if such interest income is exempt from state income taxes under the laws of the United States.”

Note: The KRS 141.019(1)(d) exclusion requires exemption 'under the laws of the United States.' FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) have no bondholder exemption from state income taxes; the corporate-level preemption does not protect bondholders. No KY DOR named-entity publication found; confidence: medium.

Kentucky individual income tax rate is 4.0% for TY2025 (3.5% TY2026)

“A tax is imposed upon the Kentucky adjusted gross income of every resident individual for each taxable year at the rate of four percent (4%).”

Note: Rate falls to 3.5% for TY2026 (HB 1 enacted). Fixed-date IRC conformity 12/31/2024 (no §1211/§1212 effect). Kentucky local taxes reach wages only, not investment income.

U.S. Treasury interest exempt from Kentucky income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from Kentucky income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

Kentucky individual income tax rate is 4.0% for TY2025 (3.5% TY2026)

“A tax is imposed upon the Kentucky adjusted gross income of every resident individual for each taxable year at the rate of four percent (4%).”

Note: Rate falls to 3.5% for TY2026 (HB 1 enacted). Fixed-date IRC conformity 12/31/2024 (no §1211/§1212 effect). Kentucky local taxes reach wages only, not investment income.

Kentucky inheritance tax: Class A (children, parents, spouses, siblings) fully exempt; Class B 4%-16%; Class C 6%-16% (TY2025)

“Generally, the closer the relationship the greater the exemption and the smaller the tax rate. ... Class B beneficiaries receive a $1,000 exemption and the tax rate is 4 percent to 16 percent. ... Class C beneficiaries receive a $500 exemption and the tax rate is 6 percent to 16 percent.”

Note: Kentucky DOR inheritance tax page: Class A beneficiaries (surviving spouse, parent, child, grandchild, brother, sister) receive the greatest exemption and are fully exempt; Class B carry a $1,000 exemption at 4% to 16%; Class C carry a $500 exemption at 6% to 16%. Class B and C rate ranges quoted verbatim from the live Kentucky DOR page; the underlying rates are set by KRS §140.070 and the Class A exemption by KRS §140.080.

Kentucky individual income tax rate is 4.0% for TY2025 (3.5% TY2026)

“A tax is imposed upon the Kentucky adjusted gross income of every resident individual for each taxable year at the rate of four percent (4%).”

Note: Rate falls to 3.5% for TY2026 (HB 1 enacted). Fixed-date IRC conformity 12/31/2024 (no §1211/§1212 effect). Kentucky local taxes reach wages only, not investment income.

Kentucky recomputes a migrating resident's capital-loss carryforward on an in-state basis (structural inference)

“A nonresident individual shall be taxable only upon the amount of income received by the individual from labor performed, business done, or from other activities in this state, from tangible property located in this state, and from intangible property which has acquired a business situs in this state; provided, however, that the situs of intangible personal property shall be at the residence of the real or beneficial owner and not at the residence of a trustee having custody or possession thereof.”

Note: URL corrected: the prior id=53726 resolved to KRS 18A.110, not KRS 141.020; the levy statute KRS 141.020 is id=56339. KRS 141.020 taxes a nonresident only on in-state-source income, so nonresident/part-year income is recomputed on an in-state-source basis and an imported pre-residency federal section 1212 carryforward is recalculated rather than imported in full. Quote verbatim from the live KRS 141.020 PDF (fetched via curl). No published guidance addresses the imported carryforward directly, so that application remains a structural inference.