by Frankfort, Kentucky — For retirees aged 65 and older in Kentucky, the 2025 tax year brings promising news. While the state has no extra standard deduction for seniors, Kentucky offers meaningful senior benefits via nonrefundable tax credits and property tax exemptions, which supplement federal relief to ease financial stress for older residents.
This article explores how these provisions work together to potentially lower your overall tax burden.
No Additional Standard Deduction at the State Level
Unlike federal tax law, Kentucky does not provide an extra standard deduction specifically for those aged 65 and older. The state’s standard deduction remains uniform—$3,160 for the 2024 tax year, as noted in the Kentucky Department of Revenue’s tax instructions.
What Kentucky Seniors Actually Get — Tax Credits
Kentucky does offer a direct $40 personal tax credit for residents aged 65 or older, applied on Schedule ITC when filing state taxes (Department of Revenue). If a taxpayer is legally blind as well, they can claim an additional $40 credit, totaling $80 per qualifying individual. This credit is separate from, and in addition to, the standard deduction.
Property Tax Relief Through the Homestead Exemption
Another valuable benefit for seniors is Kentucky’s Homestead Exemption. Homeowners aged 65 and older may exclude a portion of their home’s assessed value—$49,100 for 2025 and 2026, up from previous years—from property taxation.
This exemption can significantly reduce annual property tax liabilities, which is especially beneficial for retirees on fixed incomes.
Federal Tax Boost for Seniors
At the federal level, the 2025 tax year brings enhanced relief for seniors through the “One Big Beautiful Bill” (OBBB). This includes:
- A new $6,000 additional standard deduction per qualifying senior, or $12,000 for married couples where both are 65+.
- This “bonus” deduction is available through 2028, even if you itemize, and phases out at higher income levels (single MAGI above $75,000; joint above $150,000).
According to Kiplinger, Combined with the regular federal extra standard deduction for seniors—$2,000 for singles and $1,600 per spouse jointly—this translates to substantial federal tax reduction for eligible individuals.
How These Tax Benefits Add Up
While Kentucky doesn’t expand the standard deduction for older adults, seniors can still enjoy notable savings through:
- The $40 senior credit on state returns
- The Homestead Exemption on property taxes
- The federal senior bonus deduction of up to $6,000 (or $12,000 for couples) for 2025–2028
Read Also: Understanding the Kansas Extra Standard Deduction for Seniors Over 65
Here’s a quick breakdown:
| Benefit Source | What Seniors Get |
|---|---|
| Kentucky State Tax | $40 credit (plus $40 if blind) |
| Homestead Exemption | $49,100 reduction in property taxable value |
| Federal Tax (2025–2028) | Up to $6,000 extra deduction (per person) |
Planning Tips for Kentucky Seniors
- Claim all benefits: Make sure to apply for the state credit and property exemption when filing.
- Watch your income: To maximize the federal senior bonus deduction, try to remain under the phase-out thresholds.
- Consider itemizing carefully: Thanks to the extra federal senior deduction, itemizing may not offer additional benefit for many retirees.
Final Thoughts
For retirees in Kentucky, 2025 offers a mix of moderate state-level relief and generous federal incentives. While there’s no extra standard deduction from the Commonwealth, seniors can combine the state senior credit, homestead exemption, and federal senior bonus deduction to potentially reduce both income and property taxes considerably.
What do you think about Kentucky’s approach to supporting seniors through tax policy? Have you claimed these benefits or planned around them? Join the conversation in the comments at ibwhsmag.com.
