Kentucky Estate Tax

Kentucky Estate & Inheritance Tax — Best Proven Guide (2026)

By Oleg Kachko · Updated June 12, 2026

✓ Verified June 2026

This guide explains Kentucky estate tax and inheritance tax in plain English — whether Kentucky taxes your estate, who pays, the exact exemptions, and how the federal estate tax fits in for 2026. All figures verified as of June 2026.

Kentucky Estate & Inheritance Tax at a Glance

Here is exactly how Kentucky estate tax and inheritance tax work:

Does Kentucky have an estate tax? NO
Does Kentucky have an inheritance tax? YES
Inheritance tax — who pays Kentucky imposes an inheritance tax on beneficiaries based on their relationship to the decedent. Class A beneficiaries (spouse, children, grandchildren, parents, siblings) are fully exempt. Class B beneficiaries (nieces, nephews, aunts, uncles, sons-in-law, daughters-in-law) are fully exempt for decedents dying on or after January 1 2026 under HB 726 enacted in the 2025 legislative session. Class C beneficiaries (all others including friends, unmarried partners, cousins, non-exempt organizations) pay progressive rates from 6 percent to 16 percent after a 500 dollar exemption. Class C rates: first 10000 at 6 percent, 10001-20000 at 8 percent, 20001-30000 at 10 percent, 30001-45000 at 12 percent, 45001-60000 at 14 percent, over 60000 at 16 percent.
Federal estate-tax exemption (2026) 15000000 per individual (30000000 for married couples using portability). The One Big Beautiful Bill Act signed July 4 2025 made the higher exemption permanent at 15000000 indexed for inflation, replacing the scheduled TCJA sunset that would have dropped the exemption to approximately 7000000. The top federal rate remains 40 percent on amounts above the exemption.

Who is exempt from Kentucky inheritance tax: Class A beneficiaries (spouse, parent, child, grandchild, great-grandchild, brother, sister, half-brother, half-sister) are completely exempt and owe zero inheritance tax. Class B beneficiaries (nieces, nephews, half-nieces, half-nephews, daughters-in-law, sons-in-law, aunts, uncles) are fully exempt for deaths on or after January 1 2026 under HB 726. Class C beneficiaries receive only a 500 dollar exemption.

Charitable, religious, and educational organizations exempt under KRS 140.060 may also be exempt. The inheritance tax return is due within 18 months of death, and a 5 percent discount applies if paid within 9 months.

Spousal portability (federal): Yes, the federal estate tax exemption allows spousal portability. A surviving spouse may use the deceased spouse unused exclusion (DSUE) by filing IRS Form 706 even if no federal estate tax is owed. This can shield up to 30000000 combined for a married couple. Note that the generation-skipping transfer (GST) tax exemption is not portable.

Gift tax: Kentucky does not have a state gift tax. Only the federal gift tax applies. The 2026 federal annual gift tax exclusion is 19000 per recipient. Lifetime gifts above the annual exclusion count against the unified 15000000 federal estate and gift tax exemption.

Who Actually Owes Estate Tax in Kentucky

Most Kentucky families owe no estate or inheritance tax. With the federal exemption at 15000000 and Kentucky having no estate tax, only very large estates face federal liability. For inheritance tax, close family members (Class A and now Class B as of 2026) are fully exempt. Only Class C beneficiaries (friends, unmarried partners, distant relatives, non-exempt entities) face Kentucky inheritance tax.

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Families leaving property to non-family members or unmarried partners may wish to consult a licensed Kentucky estate planning attorney to explore trust strategies or other tools to reduce exposure.

Other Kentucky estate/inheritance tax rules: Kentucky inheritance tax applies to both real and personal property located in Kentucky and to intangible personal property of Kentucky residents regardless of where located. Non-residents are taxed only on real and tangible personal property situated in Kentucky.

The personal representative of the estate is responsible for filing the inheritance tax return (Form 92A200 or short form 92A205) and may file a no-tax-due affidavit (Form 92A201) when only exempt beneficiaries inherit. A 5 percent discount on tax owed is available if the return is filed and tax paid within 9 months of the date of death. Interest accrues on unpaid tax after 18 months.

HB 726 enacted during the 2025 Regular Session eliminated inheritance tax for Class B beneficiaries effective for decedents dying on or after January 1 2026, significantly narrowing who owes the tax. Kentucky is one of only six states that still impose an inheritance tax.

Understanding Kentucky Estate and Inheritance Tax

Worrying about Kentucky estate tax is common, but most families owe nothing. Whether Kentucky estate tax applies depends on the size of the estate and whether Kentucky levies an estate tax, an inheritance tax, or neither. The table above shows the exact exemptions and rates, plus the federal exemption and its 2026 change, so you can see where you actually stand on Kentucky estate tax.

If your estate is large enough that Kentucky estate tax could apply, a licensed tax professional in your state can help you plan.

Official Kentucky Sources & Resources

This Kentucky estate-tax guide was last verified against official sources in June 2026. Tax laws and exemptions change yearly — verify with your state revenue department or a licensed tax professional.

More Kentucky Wills & Probate Guides

Disclaimer: This guide is informational only and is not legal or tax advice. Estate, probate, and tax laws change and vary by state and county. Verify current rules and dollar figures with your state’s court, statute, or a licensed attorney or tax professional before acting. For urgent matters like an active probate or a tax deadline, consult a licensed professional in your state right away.

Estate planning? Make sure your life insurance is in order — see Life Insure Guide. Worried about Medicaid estate recovery? See Medicare Cover Guide. Divorced recently? Update your will and beneficiaries — see Divorce Help Guide.