#9 State: Kentucky
Social Security benefits are up to $31,110 per person of retirement income from IRAs, 401(k)s, private pensions, and annuities being exempt from taxes. There is an additional exclusion for qualified military, civil service, and state and local government pensions, but Kentucky also has a homestead exemption on qualifying single-unit residential property.
For homeowners 65 and older or the totally disabled, $37,600 of the assessed value of their property is exempt from state taxes. Though Kentucky has a flat income tax of 5 percent and average sales tax of 6 percent, it has no inheritance tax.
