Your Tax Solutions works with Fort Knox servicemembers, military spouses, Fort Knox civilians and Vine Grove families and businesses. Military taxes come with their own rules: Kentucky doesn’t tax active duty pay, combat pay can be excluded, and spouses can often choose their state of residence. Our Elizabethtown team helps you get those details right.
Does Kentucky tax active duty military pay?
No. According to the Kentucky Department of Revenue, all military pay received by members of the Armed Forces while on active duty can be excluded from Kentucky income. This applies to active duty, reserve and National Guard members. Full-year Kentucky residents subtract the pay on Schedule M, and part-year residents subtract it on Form 740-NP. If your only income is active duty pay and no Kentucky tax was withheld, you generally don’t need to file a Kentucky return. If Kentucky tax was withheld by mistake, the Department of Revenue says it will refund it.
What is my state of legal residence?
Your state of legal residence (domicile) decides which state can tax your income, and it doesn’t automatically change when you PCS to Fort Knox. The Kentucky DOR notes that if your state of legal residence is Kentucky, you’re a Kentucky resident for income tax purposes wherever you’re stationed. If your legal residence is another state, Kentucky generally can’t tax your military pay just because you’re stationed here. Other income, like a civilian side job in Kentucky or rental income, can follow different rules.
How do military spouse residency rules work?
Under the Military Spouses Residency Relief Act, as updated in 2018, a military spouse may elect to use the servicemember’s state of legal residence for state income tax purposes, even if the spouse has never lived there, as long as the spouse is in Kentucky to be with the servicemember on military orders. This can affect where a spouse’s wages are taxed and whether Kentucky tax should be withheld. We help spouses review their situation and paperwork.
Can I deduct PCS moving expenses?
Members of the Armed Forces on active duty who move because of a permanent change of station can deduct certain unreimbursed moving expenses on their federal return, using Form 3903, according to the IRS. Reimbursed or government-provided moving costs can’t be deducted. Keep your orders, receipts and travel records.
Is combat pay taxable?
Pay earned while serving in a combat zone is generally excluded from federal income tax. Enlisted members and warrant officers can exclude all of it, while commissioned officers have a monthly limit set by the IRS. The excluded amount usually already shows up on your W-2.
What local taxes apply in Vine Grove?
The City of Vine Grove has its own occupational license requirements for businesses and employers in city limits, and we handle those filings for you. Work in unincorporated Hardin County is subject to the county’s occupational license tax. Fort Knox itself is a federal installation, so check with us about how local taxes apply to your job.
What services do you offer Fort Knox and Vine Grove clients?
- Tax preparation: individual and family returns, plus business returns for sole proprietors, LLCs, partnerships and S corporations. Also multi-state and amended returns, 1099s, and sales and use tax filings.
- Bookkeeping: monthly bookkeeping, catch-up and cleanup work, and QuickBooks setup from QuickBooks ProAdvisors.
- Payroll: payroll processing with direct deposit, federal, Kentucky and local withholding, and year-end W-2s and 1099s.
How do I get from Fort Knox or Vine Grove to your office?
From Fort Knox, head south on US-31W through Radcliff into Elizabethtown. From Vine Grove, take KY-144 east to US-31W, then south. Our office is at 110 Chase Way, Suite 4, Elizabethtown, KY 42701. Call (270) 723-1040 or email Info@yourtaxsolutions.org.
Who will prepare my return?
Returns are prepared by our team of experienced tax preparers, led by owner Sally Harrod, who has more than 25 years of experience and holds an IRS Annual Filing Season Program Record of Completion. Together, our team brings more than 85 years of combined experience.
Ready for help with your military taxes?
Kentucky’s state income tax rate changed for 2026. See our 2026 Kentucky income tax rate guide for what changed for non-military income. Then book a free consultation with our Elizabethtown team. It’s genuinely free.
Frequently asked questions
Does Kentucky tax military pay for Fort Knox soldiers?
No. Kentucky does not tax active duty military pay. Members of the Armed Forces, reserves and National Guard can exclude active duty pay from Kentucky income, and Kentucky tax should not be withheld from active duty pay.
Can a military spouse at Fort Knox keep their home state for taxes?
Usually, yes. Under the Military Spouses Residency Relief Act, as updated in 2018, a spouse who is in Kentucky to be with a servicemember on military orders may elect to use the servicemember’s state of legal residence for state income tax purposes.
Is combat zone pay taxable?
Pay for service in a combat zone is generally excluded from federal income tax. Enlisted members and warrant officers can exclude all of it, and commissioned officers can exclude up to a monthly limit set by the IRS.
Sources
- Kentucky DOR – Military Exemptions (active duty pay exclusion, Schedule M / 740-NP, residency)
- Kentucky DOR – Military Tax Issues (withholding, refunds, filing requirement)
- IRS – Publication 3, Armed Forces’ Tax Guide
- IRS – Tax exclusion for combat service
- IRS – Topic 455, Moving expenses for members of the Armed Forces
- DoD Military OneSource – Military Spouses Residency Relief Act
- Hardin County – Occupational Tax