Kentucky Inheritance Tax
Figures verified October 17, 2026 against Kentucky Department of Revenue · Update log
- State estate tax: No
- Inheritance tax: Yes, depends on who inherits
- Federal: only above $15 million
Short answer
Kentucky has no estate tax, but it has an inheritance tax. Whether you owe depends on your relationship to the person who died: spouse, parent, child, stepchild, grandchild, brother, sister, half-brother, half-sister, and (for deaths from january 1, 2026) nieces and nephews, including half-nieces and half-nephews pay nothing. The tax is due 24 months after the date of death (18 months for deaths before July 1, 2026).
What to do, and by when
| Who files | Which form | Deadline |
|---|---|---|
| The executor, usually paying from each heir's share | Kentucky inheritance tax: Kentucky Inheritance Tax Return | For deaths on or after July 1, 2026: 24 months after the date of death, with a 5% discount if paid within 14 months. For earlier deaths: 18 months, and 9 months for the discount |
| The executor, only if the estate is over $15 million or to keep the unused exemption for a surviving spouse | Federal Form 706 | 9 months after the date of death (an automatic 6-month extension to file is available on Form 4768) |
| The executor | Final Form 1040 for the person who died | April 15 of the year after death |
Quick facts: Kentucky (2026)
| Estate Tax | No |
|---|---|
| Inheritance Tax | Yes |
| Inheritance Tax Rates | 0% to 16% |
| Inheritance Tax Due | For deaths on or after July 1, 2026: 24 months after the date of death, with a 5% discount if paid within 14 months. For earlier deaths: 18 months, and 9 months for the discount |
| Federal Exemption (2026) | $15 million |
| Tax Authority | Kentucky Department of Revenue |
| Verified | 2026-10-17 |
Kentucky inheritance tax rates by relationship
Inheritance tax is charged on what each beneficiary receives, at a rate set by their relationship to the person who died. The executor usually pays it from the estate before distributing.
| Class | Who | Rate |
|---|---|---|
| Class A | Spouse, parent, child, stepchild, grandchild, brother, sister, half-brother, half-sister, and (for deaths from January 1, 2026) nieces and nephews, including half-nieces and half-nephews | Exempt |
| Class B | Son- or daughter-in-law, aunt, uncle, great-grandchild (and nieces and nephews for deaths before 2026) | $1,000 exemption, then 4% to 16% |
| Class C | Everyone else, including cousins and friends | $500 exemption, then 6% to 16% |
Deadline: For deaths on or after July 1, 2026: 24 months after the date of death, with a 5% discount if paid within 14 months. For earlier deaths: 18 months, and 9 months for the discount.
What's specific to Kentucky
- Siblings are fully exempt in Kentucky (Class A), unlike in Pennsylvania and New Jersey. For deaths on or after January 1, 2026, nieces and nephews are exempt too (2026 Ky. Acts ch. 198, KRS 140.070). The Department of Revenue's own guide had not caught up with this as of October 2026.
- For deaths on or after July 1, 2026, tax paid within 14 months of death gets a 5% discount and the tax is due within 24 months (2026 Ky. Acts ch. 161, KRS 140.210). For earlier deaths the windows are 9 and 18 months. Tax over $5,000 can be paid in 10 annual installments.
- If everything passes to Class A beneficiaries and no federal Form 706 is required, an Affidavit of Exemption can be filed instead of a return.
What executors file, and when
- Kentucky inheritance tax (Kentucky Inheritance Tax Return): For deaths on or after July 1, 2026: 24 months after the date of death, with a 5% discount if paid within 14 months. For earlier deaths: 18 months, and 9 months for the discount.
- Federal Form 706: only if the estate is over $15 million, or to elect portability for a surviving spouse. Due 9 months after the date of death (an automatic 6-month extension to file is available on Form 4768).
- Final Form 1040 for the person who died: due April 15 of the following year.
- Form 1041 (estate income tax): if the estate has $600 or more of income.
Optional: get help filing
Get a flat-fee quote to file the Kentucky inheritance tax return
Tell us a little about the estate and a CPA or Enrolled Agent who prepares Kentucky inheritance tax returns will reply with a fixed price. Free, and no obligation.
Federal estate tax
For deaths in 2026, the federal estate tax applies only to estates over $15,000,000 per person, at rates up to 40%. The exemption was set by the July 4, 2025 tax law (Public Law 119-21, often called the "One Big Beautiful Bill Act"; the IRS now calls it the Working Families Tax Cuts law), is permanent, and is indexed for inflation starting in 2027. A surviving spouse can add the unused exemption of the first spouse to die (portability) by filing Form 706. See the federal estate tax guide.
Frequently asked questions
Do I have to pay inheritance tax in Kentucky?
It depends on your relationship to the person who died. Class A (spouse, parent, child, stepchild, grandchild, brother, sister, half-brother, half-sister, and (for deaths from january 1, 2026) nieces and nephews, including half-nieces and half-nephews): exempt. Class B (son- or daughter-in-law, aunt, uncle, great-grandchild (and nieces and nephews for deaths before 2026)): $1,000 exemption, then 4% to 16%. Class C (everyone else, including cousins and friends): $500 exemption, then 6% to 16%.
Does Kentucky have an estate tax in 2026?
No. Kentucky has no estate tax. Only the federal estate tax can apply, and only to estates over $15 million (2026).
When is Kentucky inheritance tax due?
For deaths on or after July 1, 2026: 24 months after the date of death, with a 5% discount if paid within 14 months. For earlier deaths: 18 months, and 9 months for the discount. The filing is Kentucky Inheritance Tax Return.
Who pays Kentucky inheritance tax, the estate or the heir?
The tax is owed on each beneficiary's share. In practice the executor usually pays it out of the estate before distributing, unless the will says otherwise, so heirs receive their share net of tax.
Is an inheritance taxable income?
No. Money or property you inherit is not federal taxable income. But withdrawals from an inherited traditional IRA or 401(k) are taxed as income, and if you sell inherited property you may owe capital gains tax on any increase in value after the date of death.
What is the federal estate tax exemption for 2026?
$15,000,000 per person for deaths in 2026, set by Public Law 119-21 (2025). It is permanent and indexed for inflation from 2027. A surviving spouse can add the unused exemption of the first spouse to die (portability) by filing Form 706.
Sources
- 1.Kentucky Department of Revenue — official guidancerevenue.ky.gov
- 2.Kentucky Department of Revenuerevenue.ky.gov
- 3.Kentucky statuteapps.legislature.ky.gov
- 4.IRS — Estate Taxirs.gov
- 5.IRS — What's New, Estate and Gift Taxirs.gov
- 6.Tax Foundation — Estate and Inheritance Taxes by State, 2026taxfoundation.org
This information is provided for educational purposes only and should not be considered legal or tax advice. Consult a qualified tax professional for guidance specific to your situation.