Kentucky taxes the person who inherits, not the estate: the inheritance tax depends on how closely the beneficiary is related to the person who died, and the closer the relationship the larger the exemption and the lower the rate. There is no Kentucky estate tax.
This guide sets out the three beneficiary classes, the rate tables, the 2026 law that moved nieces and nephews into the exempt class, the filing deadline and 5% early-payment discount (which changed for deaths on or after 1 July 2026), how out-of-state property is treated, and the federal estate tax. It uses the Kentucky Revised Statutes as published by the General Assembly, the Department of Revenue's inheritance tax page and 2021 guide, and the IRS, read on 2 November 2026.
Kentucky has an inheritance tax and no estate tax. The Department of Revenue says plainly that there is no Kentucky estate tax, and its guide adds that there has been none since 1 January 2005. The inheritance tax is a tax on a beneficiary's right to receive property from a deceased person, and the amount depends on the beneficiary's relationship to the decedent and the value of the property.
The federal estate tax is separate and still exists; see the federal section below.
| Class | Who is in it | Exemption | Rates |
|---|---|---|---|
| A | Parent, surviving spouse, child by blood, stepchild, child adopted during infancy, child adopted during adulthood who was reared by the decedent during infancy, grandchild who is the issue of a child by blood, stepchild or adopted child, brother, sister (including half blood), and, since the 2026 amendment, nephew, niece, or a nephew or niece of the half blood | Entire inheritance exempt | None |
| B | Daughter-in-law, son-in-law, aunt, uncle, and a great-grandchild who is the grandchild of a child by blood, stepchild or child adopted in infancy | $1,000 | 4% to 16% |
| C | Any person not in Class A or B, and educational, religious or other institutions not exempted by KRS 140.060. The Department lists cousins as Class C | $500 | 6% to 16% |
The Department of Revenue also states that nieces and nephews by marriage and great-nieces and great-nephews are Class C beneficiaries. Transfers to institutions whose sole purpose is charitable, educational or religious work, and to cities, towns or public institutions in Kentucky for public purposes, are exempt under KRS 140.060.
Each beneficiary's tax is worked out separately on the value that beneficiary receives. Under KRS 140.080 the exemption is chargeable against the lowest bracket.
Class B (daughter-in-law, son-in-law, aunt, uncle, great-grandchild):
| Value of the share | Rate |
|---|---|
| Up to $10,000 | 4% |
| $10,000 to $20,000 | 5% |
| $20,000 to $30,000 | 6% |
| $30,000 to $45,000 | 8% |
| $45,000 to $60,000 | 10% |
| $60,000 to $100,000 | 12% |
| $100,000 to $200,000 | 14% |
| Over $200,000 | 16% |
Class C (everyone else):
| Value of the share | Rate |
|---|---|
| Up to $10,000 | 6% |
| $10,000 to $20,000 | 8% |
| $20,000 to $30,000 | 10% |
| $30,000 to $45,000 | 12% |
| $45,000 to $60,000 | 14% |
| Over $60,000 | 16% |
House Bill 869 of the 2026 Regular Session was signed by the Governor on 27 April 2026 as Acts Chapter 198. It amended KRS 140.070 and 140.080 so that a nephew, niece, or nephew or niece of the half blood is a Class A beneficiary, and the General Assembly made the change apply to estates of decedents who died on or after 1 January 2026.
The Department's page and guide have not caught up. On 2 November 2026 the Department of Revenue's inheritance tax page and its January 2021 guide (form 92F101) still list niece and nephew under Class B, with a $1,000 exemption and rates of 4% to 16%. The statute text, which controls, lists them in Class A for deaths on or after 1 January 2026. For a death in 2025 or earlier, those pages describe nieces and nephews as Class B. The Class B and Class C exemptions and rate tables are the same as the Department's published tables.
The filing and payment deadlines also changed. 2026 Kentucky Acts chapter 161, effective 14 April 2026, amended KRS 140.160, 140.210 and 140.222. For deaths before 1 July 2026 the return and tax are due within 18 months, a 5% discount applies if the tax is paid within nine months, and interest runs from 18 months. For deaths on or after 1 July 2026 the return and tax are due within 24 months, the 5% discount applies if the tax is paid within 14 months, and interest runs from 24 months. The Department's page and guide still describe only the 18-month and nine-month rules, so for a death on or after 1 July 2026 follow the statute and confirm with the Department.
A separate 2026 bill (House Bill 147) would have extended the filing deadline to 36 months; its last recorded action was referral to committee on 14 January 2026, and it is not the source of the 24-month rule. We found no enacted 2027 change to the classes, exemptions or rates.
KRS 140.090 allows these deductions and no others from a beneficiary's share, among them the decedent's debts (with exceptions), federal estate taxes in proportion to the Kentucky share, funeral, monument and cemetery lot expenses actually paid up to $5,000 in total, executors' commissions, and costs of administration including attorney's fees.
Life insurance: under KRS 140.030, proceeds payable to a designated beneficiary other than the insured or the insured's estate are tax-free. The Department's guide lists life insurance payable to the insured or to the estate among taxable property.
Out-of-state property: all property belonging to a Kentucky resident is subject to the tax except real estate located in another state, and a resident's intangible property outside Kentucky is taxable. For a nonresident, real estate and personal property in Kentucky can be taxed, and the beneficiary's exemption is prorated. The Department says that if the decedent was not a Kentucky resident and owned no Kentucky real estate or business-situs property, you need to contact the revenue department of the state where the decedent lived.
Kentucky's lack of an estate tax does not remove the federal estate tax. The IRS reports a basic exclusion amount of $15,000,000 for a decedent dying in 2026, and says that estates of decedents survived by a spouse may elect, on a timely filed estate tax return, to pass the decedent's unused exclusion to the surviving spouse. As of 2 November 2026 the IRS page lists no 2027 exclusion amount.
| Case (death on or after 1 Jan 2026) | Calculation | Tax |
|---|---|---|
| Niece inherits $100,000 (Class A) | Entire inheritance exempt | $0 |
| Son-in-law (Class B) inherits $100,000 | (10,000 - 1,000) x 4% + 10,000 x 5% + 10,000 x 6% + 15,000 x 8% + 15,000 x 10% + 40,000 x 12% = 360 + 500 + 600 + 1,200 + 1,500 + 4,800 | $8,960 |
| Cousin (Class C) inherits $100,000 | (10,000 - 500) x 6% + 10,000 x 8% + 10,000 x 10% + 15,000 x 12% + 15,000 x 14% + 40,000 x 16% = 570 + 800 + 1,000 + 1,800 + 2,100 + 6,400 | $12,670 |
| Same cousin, tax paid within the discount window (14 months for deaths on or after 1 July 2026; nine months for earlier deaths) | 12,670 x 95% | $12,036.50 |
These are our own calculations from the statute's rate tables and the exemption rule, not official figures; the $8,960 and $12,670 results match the totals in the Department of Revenue's published tax table. An actual estate can have deductions and other facts that change the result, so check with the Department or a professional.
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