KY risk area
Tax exposure in Kentucky
State estate or inheritance tax rules and how they interact with federal thresholds.
Kentucky imposes an inheritance tax with exemptions and rates based on beneficiary class.
Does the state impose an estate or inheritance tax?Who is exempt or receives preferential treatment?How does federal tax interact with state rules?
At a glance
Key takeaways
- Class A beneficiaries (spouse, parent, child, grandchild, sibling) are exempt.
- Class B beneficiaries receive a $1,000 exemption and are taxed at 4% to 16%.
- Class C beneficiaries receive a $500 exemption and are taxed at 6% to 16%.
- Inheritance tax rates depend on beneficiary class, and close relatives are often exempt or taxed at lower rates.
Questions to consider
Questions this risk area helps you evaluate in Kentucky
- Does the state impose an estate or inheritance tax?
- Who is exempt or receives preferential treatment?
- How does federal tax interact with state rules?
State overview
Kentucky imposes an inheritance tax with exemptions and rates based on beneficiary class.
- Class A beneficiaries (spouse, parent, child, grandchild, sibling) are exempt.
- Class B beneficiaries receive a $1,000 exemption and are taxed at 4% to 16%.
- Class C beneficiaries receive a $500 exemption and are taxed at 6% to 16%.
- Inheritance tax rates depend on beneficiary class, and close relatives are often exempt or taxed at lower rates.
Sources
- https://revenue.ky.gov/Individual/Inheritance-Estate-Tax/Pages/default.aspx
- https://taxfoundation.org/data/all/state/estate-inheritance-taxes/
Risk sources
- IRS inflation adjustments for tax year 2026
Use for the current federal estate tax basic exclusion amount.
- IRS Instructions for Form 706 (United States Estate Tax Return)
Defines filing requirements and federal estate tax framework.
- Tax Foundation - State estate and inheritance taxes
Current list of states with estate or inheritance taxes.
National sources provide baseline context; state statutes and court rules control in Kentucky.