KRS 164A.370: Tax exemption.

The property of the trust and its income from operations shall be exempt from all taxation

by the Commonwealth of Kentucky or any of its political subdivisions. Investment

income earned on contributions paid by any participant and used for qualified educational

expenses defined in KRS 164A.305(13) or refunded under KRS 164A.350 shall not be

subject to Kentucky income tax by either a participant or any beneficiary of a

participation agreement, the purposes for which the investment income was accrued being

deemed and declared to be entirely public in nature. Earnings that are not used for

qualified educational expenses as defined in KRS 164A.305(13) and are refunded shall be

subject to Kentucky income tax, except for earnings refunded pursuant to KRS 164A.350.