Pegasus Institute

Even after reducing its pension exclusion during the last legislative session, Kentucky still has one of the highest in the country. Retiree

The Mercatus Center released its full report on the fiscal condition of the states. Using data from states’ 2016 Comprehensive Annual Financial Reports, Mercatus was able to compare their ability to “meet its short-term and long-term obligations without incurring excessive debt, engaging in budget gimmicks, or using other evasive tactics.” The study measures five areas: cash solvency, budget solvency, long-run solvency, service-level solvency, and trust fund solvency. Taking

Though it has been treated as if it was one of the Ten Commandments, Kentucky’s pension exclusion, which exempts pension income from state income taxes, has actually only been in place since 1995. In 1997, the exclusion amount was increased from $6,250, where it had been established two years earlier, to $35,000 and indexed to inflation. The indexing was frozen as part of the 2005 tax reform package at $41,110, providing us with the arbitrary figure that the exclusion remaine