Get Ky: A Guide To Kentucky Inheritance And Estate Taxes - Revenue Ky

Yes, Kentucky is fairly tax-friendly for retirees. As is mentioned in the prior section, it does not tax Social Security income. Other forms of retirement income (pension income, 401(k) or IRA income) are exempt up to a total of $31,110 per person. The state's sales tax rate is 6%.

Unlike most other states, Kentucky utilizes the “dower and curtesy” inheritance structure. If a spouse dies without a will, the spouse receives the dower share, but not the entire estate. Because of these laws, you'll want to consider a will to designate how you want your assets distributed, despite being married.

Kentucky has two death taxes. The Kentucky inheritance tax is a tax on a beneficiary's right to receive property from a deceased person. The amount of the inheritance tax depends on the relationship of the beneficiary to the deceased person and the value of the property.

An inherited IRA is considered part of a deceased person's estate. That means that if the estate is large enough, it's possible it will owe estate taxes on the value of an IRA. Estate taxes are assessed on the federal level only on very large estates, but some states impose estate taxes at lower levels.

The inheritance you receive is not taxable as it has already been taxed on your loved one's final return. If you're the legal representative of your deceased loved one, you may be responsible for amounts owing on the estate, if you do not get the proper paperwork cleared with the CRA.

Though Kentucky does not have an estate tax, the federal government does. The federal estate tax could apply to you if your estate is of sufficient value. For 2023, the exemption is $12.92 million, which is an increase over the 2022 exemption of $12.06 million.

In Kentucky, IRAs are excluded from the inheritance tax if certain conditions are met, including the requirement that the beneficiary is paid in the form of annuities rather than a lump sum.

Class B: If you were the decedent's aunt, uncle, niece, nephew, daughter-in-law, son-in-law, or great-grandchild, your first $1,000 of inheritance is exempt from inheritance tax. Then you will pay rates ranging from 4% on inheritances worth up to $10,000 and 16% on anything worth $200,000 or more.