Property Tax Exemptions By Disability Rating
Kentucky Disabled Veteran Property Tax Exemptions in 2026
KRS §132.810 — Homestead Exemption
HB 639 — Disabled Veteran Exemption (2025)
Form 62A350 — Homestead Exemption Application
Kentucky recently expanded property tax relief for disabled Veterans through HB 639, creating a tiered exemption based on disability rating. A 100% P&T Veteran can exempt up to $240,000 of assessed value in 2026, rising to $400,000 by 2030. On a $250,000 home near Fort Knox at the state average effective rate of 0.83%, that wipes out your entire property tax bill — roughly $2,075 per year back in your pocket.
Next step:
Check Your VA Loan Eligibility
100% P&T Exemption
- Up to $240,000 of assessed value exempt in 2026, scaling to $400,000 by 2030
- Covers most homes near Fort Knox and Fort Campbell where median prices run $250K–$300K
- Includes IU (Individual Unemployability) at 100% compensation rate
- File Form 62A350 with your county Property Valuation Administrator
Partial Disability (10–90%)
- Tiered exemptions from $5,000 to scaled amounts based on disability percentage
- Stacks with the general homestead exemption of $49,100 (2025–2026)
- Must be service-connected — non-service ratings do not qualify
- Have your VA rating letter ready when you apply at the PVA office
Filing And Deadlines
- File with your county PVA (Property Valuation Administrator) — not the county clerk
- Apply by January 1 of the tax year for that year’s exemption
- Kentucky has 120 counties, each with its own PVA office
- Contact your county PVA as soon as you receive your VA rating letter
VA Loan Impact
- Lower property tax = lower monthly PITI = better DTI ratio for qualification
- A $173/month savings on a $250K home adds ~$20K in buying power
- Tell your lender about the exemption during preapproval so escrow is set correctly
- Get your exemption approved before or shortly after closing
Frequently Asked Questions
How much does a 100% disabled Veteran save on property tax in Kentucky?
A 100% P&T Veteran can exempt up to $240,000 of assessed value in 2026. On a $250,000 home at the 0.83% average effective rate, that eliminates most or all of your property tax — saving approximately $2,075 per year.
Does a surviving spouse keep the Kentucky property tax exemption?
Yes. An un-remarried surviving spouse who was married to the Veteran at the time of death and continues to live in the same home can keep the exemption. Remarriage terminates the benefit.
Where do I apply for the Kentucky disabled Veteran property tax exemption?
File Form 62A350 with your county Property Valuation Administrator (PVA). Kentucky uses PVAs instead of county assessors. You will need your VA disability rating letter and proof of homestead occupancy.
The Bottom Line Up Front
Kentucky’s new HB 639 created a dedicated disabled Veteran property tax exemption with tiered benefits by rating. At 100% P&T, you can exempt up to $240,000 of assessed value in 2026 — enough to eliminate the tax bill on most homes near Fort Knox or the Kentucky side of Fort Campbell. The effective rate averaging 0.83% means lower dollar savings than high-tax states, but the exemption covers the vast majority of Veteran homebuyers in the state.
Veterans with partial disability ratings receive proportional exemptions that stack with Kentucky’s general homestead exemption of $49,100. The combination means even a Veteran with a 50% rating gets meaningful relief. Every dollar saved on property taxes reduces your monthly PITI and improves your debt-to-income ratio for VA loan qualification.
What To Do Based On Your Situation
- Buying a home in Kentucky soon: Apply for the exemption immediately after closing. Tell your lender about your disability rating during preapproval so they calculate escrow correctly from the start.
- Already own a home in Kentucky: If you have not applied, file Form 62A350 with your county PVA. Bring your VA rating letter and proof of residence.
- Surviving spouse of a Kentucky Veteran: You may keep the exemption on the same homestead as long as you remain un-remarried and continue to occupy the property. File with the PVA with the Veteran’s death certificate and your marriage documentation.
What Are The Kentucky Disability Rating Exemption Tiers?
Kentucky now offers property tax relief specifically for disabled Veterans through HB 639, which took effect in 2025. The exemptions are tiered by VA disability rating and the cap for 100% Veterans increases annually through 2030. These benefits are separate from and stack with Kentucky’s general homestead exemption.
| VA disability rating | Exemption amount (2026) | Annual savings on $250K home at 0.83% | Monthly PITI reduction |
|---|---|---|---|
| 10% to 29% | $5,000 off assessed value | $42 | $3 |
| 30% to 49% | $7,500 off assessed value | $62 | $5 |
| 50% to 69% | $10,000 off assessed value | $83 | $7 |
| 70% to 99% | $15,000 off assessed value | $125 | $10 |
| 100% P&T or IU | Up to $240,000 off assessed value | $2,075 | $173 |
| General homestead (all disabled) | $49,100 off assessed value | $407 | $34 |
Deal Math: A 100% P&T Veteran buying a $280,000 home near Fort Knox in Hardin County (effective rate ~0.90%) saves approximately $2,520 per year — $210 per month. Combined with the VA funding fee exemption (saving $6,020 upfront on a $280,000 loan), the total first-year benefit is $8,540. Over a 30-year mortgage, the property tax savings alone total $75,600.
What Is The Exemption Worth In Real Dollars?
The dollar value of Kentucky’s exemption depends on your home’s assessed value and your county’s effective tax rate. Kentucky’s statewide average effective rate is approximately 0.83%, though rates vary by county. Counties near Military installations tend to run close to that average.
| Home value | Effective tax rate | Annual tax without exemption | Annual tax with 100% exemption | Monthly savings |
|---|---|---|---|---|
| $200,000 | 0.83% | $1,660 | $0 | $138 |
| $250,000 | 0.83% | $2,075 | $0 (within $240K cap) | $173 |
| $300,000 | 0.90% | $2,700 | $540 | $180 |
| $400,000 | 0.85% | $3,400 | $1,360 | $170 |
Home Search Impact: A Veteran with the 100% exemption shopping near Fort Knox (effective rate ~0.90%) gains approximately $170 to $210 per month in payment capacity compared to a non-exempt buyer at the same income level. That translates to roughly $20,000 to $25,000 more in purchasing power at current VA rates. Kentucky’s lower home prices mean the exemption covers a larger percentage of the typical purchase price than in higher-cost states.
How Does This Affect Your VA Loan Qualification?
The property tax exemption changes your VA loan qualification in concrete ways. Your monthly PITI drops because the tax portion of escrow decreases or goes to zero. Your DTI ratio improves. Your residual income increases. And your maximum qualifying purchase price rises because the lender uses the lower payment when calculating affordability.
- PITI impact: On a $250,000 home at 6.5% with $0 down, removing $173/month in tax escrow drops your total PITI from approximately $1,750 to $1,577. That is a 10% reduction in your housing payment.
- DTI improvement: At $5,500/month gross income, that $173 reduction drops your housing DTI from 32% to 29% — giving you more margin under the VA benchmark. Files that might otherwise need compensating factors can get cleaner AUS approval.
- Buying power shift: The $173 monthly savings supports an additional $20,000 to $25,000 in purchase price at 6.5%. A Veteran who qualifies for $230,000 without the exemption may qualify for $255,000 with it.
- Escrow adjustment: If you close before the exemption is approved, your lender will initially escrow for the full tax amount. Once the exemption is applied, request an escrow re-analysis — your monthly payment will decrease and the lender will refund the overage.
Who Is Eligible For The Kentucky Veteran Exemption?
Eligibility comes down to three requirements: Veteran status, service-connected disability, and homestead occupancy. You do not need to be retired Military — any honorably discharged Veteran with a VA disability rating qualifies.
You must have received an honorable or general (under honorable conditions) discharge. Your disability must be service-connected as determined by the VA. And the property must be your primary residence — your homestead. Investment properties, second homes, and rental units do not qualify.
IU (Individual Unemployability) counts. If the VA pays you at the 100% rate due to IU, you qualify for the full exemption just as a schedular 100% Veteran does.
What Are The Exemption Amounts By Rating?
Under HB 639, the exemption amount scales with your disability percentage. The 100% tier has a cap that increases annually — $240,000 in 2026, rising to $400,000 by 2030. For most Veterans buying near Kentucky Military installations, the 2026 cap covers the full home value.
Partial disability exemptions are more modest but still meaningful when combined with the general homestead exemption. A Veteran with a 50% rating gets $10,000 off assessed value from the Veteran exemption plus $49,100 from the general homestead exemption — a combined $59,100 reduction.
Process Watchpoint: The general homestead exemption ($49,100 for 2025–2026) requires separate application on the same form. Make sure you check both boxes — the disabled Veteran exemption and the general homestead exemption — when you file Form 62A350. Missing the general homestead box means you leave $407 per year on the table at the 0.83% average rate.
How Do You Apply For The Kentucky Exemption?
Kentucky property tax exemptions are filed with the county Property Valuation Administrator — the PVA. This is different from most states where you file with the county assessor or tax office. Each of Kentucky’s 120 counties has its own PVA.
- Find your county PVA: Search “[Your County] PVA Kentucky” or use the Kentucky Department of Revenue’s PVA directory. Near Military bases: Hardin County PVA (Fort Knox), Christian County PVA (Fort Campbell KY side), Madison County PVA (Blue Grass Army Depot).
- File Form 62A350: The Homestead/Disability Exemption Application. Available at your PVA office or online through the Kentucky Department of Revenue. Check the boxes for both the disabled Veteran exemption and the general homestead exemption.
- Provide documentation: VA disability rating letter showing your service-connected rating, Kentucky driver’s license or state ID matching the property address, and the property deed showing your name.
- Deadline: Apply by January 1 of the tax year. If you miss the deadline, you will need to wait until the following tax year. Contact your PVA immediately after closing if you purchase a home mid-year.
Where Do Kentucky Veterans File By Base?
The PVA office you file with depends on which county your home is in — not which base you are assigned to. Veterans near Fort Campbell may live in Christian, Trigg, or Todd County on the Kentucky side. Fort Knox personnel typically live in Hardin, Bullitt, or Meade County.
| Military installation | County | Approx. effective rate | Annual savings on $250K home (100% P&T) | Median home price (2026 est.) |
|---|---|---|---|---|
| Fort Knox | Hardin | 0.90% | $2,250 | $290,000 |
| Fort Campbell (KY side) | Christian | 0.85% | $2,125 | $210,000 |
| Blue Grass Army Depot | Madison | 0.80% | $2,000 | $260,000 |
| Louisville area (Guard/Reserve) | Jefferson | 0.95% | $2,375 | $275,000 |
Approval Watchpoint: Fort Campbell straddles the Kentucky-Tennessee border. If you live on the Tennessee side (Montgomery County), you file with Tennessee — which has a different exemption structure. Make sure you know which state your home is in before applying. Your county PVA or county assessor can confirm.
Do Surviving Spouses Keep The Exemption?
Yes. Under HB 639, an un-remarried surviving spouse who was married to the disabled Veteran at the time of death and continues to occupy the same homestead can keep the exemption. The benefit stays in place as long as the surviving spouse remains in the home and does not remarry.
If the surviving spouse moves to a different home in Kentucky, the exemption does not automatically transfer to the new property. Remarriage permanently terminates the benefit — even if the subsequent marriage later ends through divorce or death of the new spouse.
How Does The Exemption Change Your VA Loan Math?
For a Veteran using a VA loan to buy in Kentucky, the property tax exemption directly affects your monthly payment calculation. Lenders include property taxes in your PITI (principal, interest, taxes, insurance), so reducing or eliminating the tax portion changes what you qualify for.
- Example — Fort Knox area: $280,000 purchase, 6.5% rate, $0 down, 0.90% effective tax rate. Without exemption: $2,100/month PITI. With 100% exemption: $1,890/month PITI. That $210/month difference at $6,000 gross monthly income moves your housing DTI from 35% to 31.5%.
- Funding fee interaction: 100% P&T Veterans are also exempt from the VA funding fee, saving $6,020 on a $280,000 loan. Combined with the property tax exemption, total first-year savings exceed $8,500.
- Residual income boost: Kentucky falls in the South VA residual income region. Lower PITI means more residual income after housing obligations, which can be the deciding factor on borderline files.
The Bottom Line
Kentucky’s HB 639 created a dedicated disabled Veteran property tax exemption with a $240,000 assessed value cap for 100% P&T Veterans in 2026, rising to $400,000 by 2030. That eliminates the full tax bill on most homes near Fort Knox and Fort Campbell. File Form 62A350 with your county PVA, attach your VA rating letter, and combine this with the general homestead exemption for maximum savings. The exemption is modest compared to states like Texas or Florida, but Kentucky’s lower home prices mean it covers a larger share of the typical purchase.
Frequently Asked Questions
Should I apply for the exemption before or after closing on my VA loan?
After closing — you cannot file until you own the home and it is your homestead. Apply immediately after closing to minimize the time you pay full taxes. Contact your county PVA as soon as you have the deed.
Will my lender adjust my escrow after the exemption is approved?
Not automatically. Once the exemption appears on your tax bill, request an escrow re-analysis from your lender. Your monthly payment will decrease and the lender will refund any overage in the escrow account.
Does the property tax exemption affect my VA loan qualification?
Yes. Lower property taxes mean a lower total PITI payment, which improves your DTI ratio and may increase the purchase price you qualify for. Tell your lender about your disability rating during preapproval.
Can I combine the property tax exemption with the VA funding fee waiver?
Yes. Veterans with a 10% or higher service-connected disability rating are exempt from the VA funding fee. The property tax exemption and funding fee waiver are separate benefits administered by different agencies.
What is the difference between the PVA and the county tax office?
The PVA (Property Valuation Administrator) assesses property values and processes exemption applications. The county tax office (sheriff’s office in Kentucky) collects the taxes. You file for the exemption with the PVA, not the tax collector.
Does IU (Individual Unemployability) qualify for the full exemption?
Yes. Kentucky treats IU the same as a 100% schedular rating for property tax purposes. If the VA pays you at the 100% rate due to IU, you qualify for the full $240,000 exemption cap in 2026.
What happens if my disability rating changes?
If your rating increases, you can re-file for a higher exemption. If your rating decreases below 100% P&T, the full exemption is revoked and you drop to the partial exemption matching your new rating.
Can I get the exemption on a second home or rental property?
No. The Kentucky disabled Veteran property tax exemption applies only to your primary residence homestead. Rental properties, second homes, and investment properties do not qualify.
What if my home value exceeds the $240,000 cap in 2026?
You still get the $240,000 exempted — you only pay tax on the portion above the cap. On a $300,000 home at 0.83%, you would pay tax on $60,000, or about $498 per year. The cap increases annually through 2030.
Does the general homestead exemption stack with the Veteran exemption?
Yes. The general homestead exemption of $49,100 (2025–2026) is a separate benefit. You can claim both on the same Form 62A350 filing. Make sure you check both boxes when applying.
I live on the Kentucky side of Fort Campbell — do I file in Kentucky?
Yes. If your home is in Christian, Trigg, or Todd County, you file with the Kentucky PVA for that county. If your home is across the state line in Montgomery County, Tennessee, you file with the Tennessee county assessor under Tennessee’s rules.
Can I file retroactively if I missed previous years?
The HB 639 disabled Veteran exemption took effect in 2025, so retroactive filing is limited to the years since the law was enacted. Contact your PVA for guidance on back-filing, as policies may vary by county.
