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Effective for tax years beginning 2018 and after, the Veterans Benefits and Transition Act allows the same tax benefits permitted to military personnel under the Servicemembers Civil Relief Act (SCRA) to also apply to a military spouse's nonmilitary service income under certain circumstances. This new law expands those rights originally granted to military spouses beginning tax year 2009 under the Military Spouses Residency Relief Act (MSRRA), by now allowing military spouses to choose the same state of legal residence as their servicemember for tax purposes, regardless of whether the military spouse has ever lived in that state.

​A military spouse's income is not taxable to Kentucky if all of these requirements are met:

  • ​the active duty servicemember is present in Kentucky in compliance with military orders; AND
  • the military spouse is in Kentucky solely to be with the active duty servicemember; AND
  • ​the active duty servicemember maintains legal residence in a state other than Kentucky and the military spouse chooses to claim that same state as his/her state of legal residence, too.

If all of these conditions apply, the military spouse may file a new Form K-4 with his or her employer to claim an exemption from withholding of Kentucky income tax.  

If the servicemember's spouse qualifies for military spouse relief but his or her employer withholds income tax, he or she should file Form 740-NP Kentucky Individual Income Tax Nonresident or Part-Year Resident Return to request a refund of Kentucky income tax withheld. Please check the box labeled Military Spouse.  Your income will not be reported as taxable on the Kentucky income tax return.  A military spouse who meets all of the requirements for his/her income to not be taxable to Kentucky should file a new Form K-4 with his or her employer to claim the exemption from withholding of Kentucky income tax for future years.

For tax years 2009 to 2017, both the servicemember and his/her spouse had to be legal residents of the same state before moving to Kentucky in order for a military spouse to qualify for income tax relief.  If they were not legal residents of the same state prior to being stationed in Kentucky, the military spouse would have been taxed as a Kentucky resident while living in Kentucky during those tax years. For tax years prior to 2009, military spouse income tax relief was not available.


Frequently Asked Questions 
No. Your income is not taxable to Kentucky if all of the following apply:
 
     •The active duty servicemember is present in Kentucky in compliance with military orders.
     •You, the spouse, are in Kentucky solely to be with the active duty servicemember.
     •The active duty servicemember maintains legal residence in a state other than Kentucky,
      and you, the spouse, elect to claim that state as your state of legal residence, too.
 
If these conditions apply, you may file a new Form K-4 with your employer to claim an exemption from withholding of Kentucky income tax.


You should file Form 740-NP Kentucky Individual Income Tax Nonresident or Part-Year Resident Return to request a refund of Kentucky income tax withheld. Your income will not be reported as taxable on the Kentucky income tax return and you will need to check the box labeled Military Spouse. A military spouse who qualifies for military spouse relief should file a new Form K-4 with his or her employer to claim the exemption from withholding of Kentucky income tax.

If you are filing for tax year 2018 and after:

Yes. Beginning with tax year 2018, if an active duty servicemember maintains legal residence in a state other than Kentucky and the servicemember's spouse elects to claim that same state as his/her state of legal residence too, then the spouse qualifies for military spouse relief, regardless of whether the spouse has ever lived in that state. The military spouse's income would not be taxable to Kentucky for tax years 2018 and after.

If you are filing for tax year 2009 to tax year 2017:

No. The military spouse's income would be subject to Kentucky income tax. To qualify for military spouse relief, MSRRA required that the servicemember and spouse have the same domicile prior to moving to Kentucky per military orders. The military spouse would be taxed as a full year Kentucky resident.



Individual Income Tax

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Military Spouse Exemption Form K-4 - Kentucky Withholding Certificate

Please visit IRS.gov/individuals/military for more information on military issues.

You can find more information about the Military Spouses Residency Relief Act at https://www.militaryonesource.mil/.


The Kentucky Department of Revenue conducts work
under the authority of the Finance and Administration Cabinet.