{"data":{"id":"us-ky/krs-141.019","jurisdiction":"us-ky","citation":"KRS 141.019","heading":"Calculation of adjusted gross income and net income for taxpayers other","body":"than corporations.\nIn the case of taxpayers other than corporations:\n(1) Adjusted gross income shall be calculated by subtracting from the gross income of\nthose taxpayers  the deductions allowed individuals by Section 62 of the Internal\nRevenue Code and adjusting as follows:\n(a) Exclude income that is exempt from state taxation by the Kentucky\nConstitution and the Constitution and statutory laws of the United States;\n(b) Exclude income from supplemental annuities provided by the Railroad\nRetirement Act of 1937 as amended and which are subject to federal income\ntax by Pub. L. No. 89-699;\n(c) Include interest income derived from obligations of sister states and political\nsubdivisions thereof;\n(d) Exclude employee pension contributions picked up as provided for in KRS\n6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610,\nand 161.540 upon a ruling by the Internal Revenue Service or the federal\ncourts that these contributions shall not be included as gross income until such\ntime as the contributions are distributed or made available to the employee;\n(e) Exclude Social Security and railroad retirement benefits subject to federal\nincome tax;\n(f) Exclude any money received because of a settlement or judgment in a lawsuit\nbrought against a manufacturer or distributor of \"Agent Orange\" for damages\nresulting from exposure to Agent Orange by a member or veteran of the\nArmed Forces of the United States or any dependent of  such person who\nserved in Vietnam;\n(g) 1. a. For taxable years beginning after December 31, 2005, but before\nJanuary 1, 2018, exclude up to forty-one thousand one hundred ten\ndollars ($41,110) of total distributions from pension plans, annuity\ncontracts, profit-sharing plans, retirement plans, or employee\nsavings plans; and\nb. For taxable years beginning on or after January 1, 2018, exclude\nup to thirty -one thousand one hundred ten dollars ($31,110) of\ntotal distributions from pension plans, annuity contracts, profit -\nsharing plans, retirement plans, or employee savings plans.\n2. As used in this paragraph:\na. \"Annuity contract\" has the same meaning as set forth in Section\n1035 of the Internal Revenue Code;\nb. \"Distributions\" includes but is not limited to any lump -sum\ndistribution from pension or profit -sharing plans qualifying for the\nincome tax averaging provisions of Section 402 of the Internal\nRevenue Code; any distribution from an individual retirement\naccount as defined in Section 408 of the Internal Revenue Code;\nand any disability pension distribution; and\nc. \"Pension plans, profit-sharing plans, retirement plans, or employee\nsavings plans\" means any trust or other entity created or organized\nunder a written retirement plan and forming part of a stock bonus,\npension, or profit-sharing plan of a public or private employer for\nthe exclusive benefit of employees or their beneficiaries and\nincludes plans qualified or unqualified under Section 401 of the\nInternal Revenue Code and individual retirement accounts as\ndefined in Section 408 of the Internal Revenue Code;\n(h) 1. a. Exclude the portion of the distributive share of a shareholder's net\nincome from an S corporation subject to the franchise tax imposed\nunder KRS 136.505 or the capital stock tax imposed under KRS\n136.300; and\nb. Exclude the portion of the distributive share of a shareholder's net\nincome from an S corporation related to a qualified subchapter S\nsubsidiary subject to the franchise tax imposed under KRS\n136.505 or the capital stock tax imposed under KRS 136.300.\n2. The shareholder's basis of stock held in an S corp oration where the S\ncorporation or its qualified subchapter S subsidiary is subject to the\nfranchise tax imposed under KRS 136.505 or the capital stock tax\nimposed under KRS 136.300 shall be the same as the basis for federal\nincome tax purposes;\n(i) Exclude income received for services performed as a precinct worker for\nelection training or for working at election booths in state, county, and local\nprimaries or regular or special elections;\n(j) Exclude any capital gains income attributable to property taken  by eminent\ndomain;\n(k) 1. Exclude all income from all sources for members of the Armed Forces\nwho are on active duty and who are killed in the line of duty, for the\nyear during which the death occurred and the year prior to the year\nduring which the death occurred.\n2. For the purposes of this paragraph, \"all income from all sources\" shall\ninclude all federal and state death benefits payable to the estate or any\nbeneficiaries;\n(l) Exclude all military pay received by members of the Armed Forces while on\nactive duty;\n(m) 1. Include the amount deducted for depreciation under 26 U.S.C. sec. 167\nor 168; and\n2. Exclude the amounts allowed by KRS 141.0101 for depreciation;\n(n) Include the amount deducted under 26 U.S.C. sec. 199A;\n(o) Ignore any change in the cost basis of the surviving spouse's share of property\nowned by a Kentucky community property trust occurring for federal income\ntax purposes as a result of the death of the predeceasing spouse;\n(p) Allow the same treatment allowed under Pub. L. No. 116 -260, secs. 276 and\n278, related to the tax treatment of forgiven covered loans, deductions\nattributable to those loans, and tax attributes associated with those loans for\ntaxable years ending on or after March 27, 2020, but before January 1, 2022;\n(q) For taxable years beginning on or after January 1, 2020, but before March 11,\n2023, allow the same treatment of restaurant revitalization grants in\naccordance with Pub. L. No. 117 -2, sec. 9673 and 15 U.S.C. sec. 9009c,\nrelated to the tax treatment of the grants, ded uctions attributable to those\ngrants, and tax attributes associated with those grants;\n(r) For taxable years beginning on or after January 1, 2026:\n1. Include the amount deducted for domestic research or experimental\nexpenditures under 26 U.S.C. sec. 174A; and\n2. Allow a subtraction equal to the amortization of domestic research or\nexperimental expenditures computed in accordance with 26 U.S.C. sec.\n174, as that section existed on December 31, 2024;\n(s) Include the amount deducted for any qualified film or television production,\nany qualified live theatrical production, and any qualified sound recording\nproduction under 26 U.S.C. sec. 181; and\n(t) Include interest deducted under 26 U.S.C. sec. 139L for amounts paid to a\nqualified lender on any qualified real estate loan; and\n(2) Net income shall be calculated by subtracting from adjusted gross income all the\ndeductions allowed individuals by Chapter 1 of the Internal Revenue Code, as\nmodified by KRS 141.0101, except:\n(a) Any deduction allowed by 26 U.S.C. sec. 164 for taxes;\n(b) Any deduction allowed by 26 U.S.C. sec. 165 for losses, except wagering\nlosses allowed under Section 165(d) of the Internal Revenue Code;\n(c) Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses;\n(d) Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses;\n(e) Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous\ndeduction;\n(f) Any deduction allowed by the Internal Revenue Code for amounts allowable\nunder KRS 140.090(1)(h) in calculating the value of the distributive shares of\nthe estate of a decedent, unless there is filed with the income return a\nstatement that the deduction has not been claimed under KRS 140.090(1)(h);\n(g) Any deduction allowed by 26 U.S.C . sec. 151 for personal exemptions and\nany other deductions in lieu thereof;\n(h) Any deduction allowed for amounts paid to any club, organization, or\nestablishment which has been determined by the courts or an agency\nestablished by the General Assembly and  charged with enforcing the civil\nrights laws of the Commonwealth, not to afford full and equal membership\nand full and equal enjoyment of its goods, services, facilities, privileges,\nadvantages, or accommodations to any person because of race, color, reli gion,\nnational origin, or sex, except nothing shall be construed to deny a deduction\nfor amounts paid to any religious or denominational club, group, or\nestablishment or any organization operated solely for charitable or educational\npurposes which restrict s membership to persons of the same religion or\ndenomination in order to promote the religious principles for which it is\nestablished and maintained;\n(i) A taxpayer may elect to claim the standard deduction allowed by KRS\n141.081 instead of itemized deduct ions allowed pursuant to 26 U.S.C. sec. 63\nand as modified by this section;\n(j) For taxable years beginning on or after January 1, 2026, any deduction\nallowed by 26 U.S.C. sec. 163(h)(3) as qualified residence interest shall be\nlimited to the amount of interest paid or accrued during the taxable year on the\nacquisition and home equity indebtedness of the principal residence of the\ntaxpayer and shall not be claimed for more than one (1) qualified residence;\n(k) Any deduction allowed by 26 U.S.C. sec. 224 for qualified tips;\n(l) Any deduction allowed by 26 U.S.C. sec. 225 for qualified overtime\ncompensation; and\n(m) Any deduction allowed by 26 U.S.C. sec. 163(h)(4) for qualified passenger\nvehicle loan interest.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57914","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:33Z","sha256":"c3255d726c789ea4861e7b05991160201ff860ace5530cb6cbaa693099a29616","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.018","next":"us-ky/krs-141.020"},"notice":"GroundRules: Original legal text. Not legal advice."}