Skip to content
MyMilitaryHQ
●   Military Home Resource Center
Find an Agent

My Military HQ | Fort Campbell

Fort Campbell: Kentucky or Tennessee?

Fort Campbell sits on the state line.The tax answer is not the one you were told.

A decision guide for families choosing a side at Fort Campbell. Every number on this page carries a source.

Both Sides CoveredSourced, Not Assumed
Active Duty Pay
A wash. Neither state taxes it
Retirement Pay
Tennessee does not tax it. Kentucky excludes at least $31,110, and some military retirees qualify for more
Sales Tax
Kentucky 6% with no local add on. Tennessee 7% plus local

Start Here

The answer you may be given is wrong

You may hear it at the welcome brief, in the housing office, or from an agent in town. Tennessee has no income tax. Kentucky does. So live on the Tennessee side and keep more of your pay.

That is true in general. It is not true about your military pay.

Kentucky does not tax active duty military pay. It has not since 2010. If your household income is active duty pay, the income tax question is a wash, and it should not be the reason you pick a side.

That single fact undoes the advice above. It does not mean the two sides are the same. It means the real differences are somewhere else, and this page walks you through them.

The Real Differences

Where the money actually changes

Three places. Which of them applies to you depends on where your household income comes from.

1. Military retirement pay

Tennessee has no income tax, so none of it is taxed. Kentucky excludes up to $31,110 of pension income, and military retirees may be able to exclude more than that.

Pay tied to federal service before January 1, 1998 can qualify for a larger exclusion, worked out on Kentucky Schedule P from the share of your service that falls before that date. So what Kentucky actually taxes depends on your service dates. Have a tax professional run it before this decides anything.

2. A spouse's civilian paycheck

This is the easy one to miss. Kentucky taxes civilian wages. Tennessee taxes no wages at all.

But while you are serving and here on orders, federal law lets your household pick its state for taxes: the service member's, the spouse's, or the state of the permanent duty station. Which one you pick can decide whether Kentucky touches that paycheck at all. Do not assume it does. When service ends, so does the choice.

3. What you spend

This one runs the other way. Kentucky charges 6%, and there are no local sales taxes anywhere in the state. Tennessee charges 7% before any local rate is added, and the local rate varies by county and city.

As an illustration only, using Tennessee's statewide average combined rate of 9.61%, $40,000 of taxable spending costs about $1,444 more per year on the Tennessee side. Confirm the actual rate for your address, because Montgomery County's local rate is the one that applies to you, not the state average.

Side By Side

The same household, two addresses

Red marks the side that keeps you more money on that line.

Kentucky

Oak Grove, Hopkinsville, Christian County
Active duty pay

Not taxed

Exempt in full since 2010

Military retirement pay

At least $31,110 excluded

Service before January 1, 1998 can raise the exclusion, worked out on Schedule P

Spouse civilian wages

Taxed

Unless you are serving and chose another state for taxes

Sales tax

6%

No local sales and use taxes anywhere in Kentucky

Tennessee

Clarksville, Montgomery County
Active duty pay

Not taxed

No state income tax of any kind

Military retirement pay

Not taxed

No income tax, so no cap, no threshold and no calculation

Spouse civilian wages

Not taxed

A job in Kentucky can change this

Sales tax

7% plus local

9.61% statewide average once local rates are counted. Confirm Montgomery County's own rate

Apply It

What changes for your situation

Active duty, one income, here for three years

It is a wash. Neither state touches your pay. Decide on your commute to the gate, the schools, and how fast each side resells. Do not let a tax difference that does not exist pick your house.

Retiring at Fort Campbell and staying

Tennessee is the simpler treatment. Your retirement pay is untaxed there, with no cap and nothing to calculate. Kentucky excludes at least $31,110 and possibly more depending on your service dates. Have a tax professional work out your Kentucky number before you let this pick your side.

Two incomes, spouse works locally

Check where the paycheck is earned. Kentucky taxes a civilian paycheck if you live there or if the job is there. If you are still serving, check which state your household uses for taxes first. It can change the answer.

Buying now, renting it out after you PCS

Neither tax code decides this. Look at rental demand by gate and at property tax, which is set by the county rather than the state. Run both sides as an investment, not as a tax question.

Being Straight With You

What this page does not decide

Taxes are one input, and they may not be the biggest one.

Your commute to the gate you actually use, the school district, what your money buys on each side, and how quickly each side resells when you move again. Those can matter more than any line above.

The first of those has a page of its own. What shift work changes about your housing search covers why two homes the same distance from post can produce different commutes once you work nights, early starts or weekends.

This page will not tell you where to live. It tells you which differences are real, so you stop weighing one that is not.

Nothing here is tax advice or a tax opinion. Tax rules change, and your situation is specific to your household, your state of legal residence, and your orders. Note that your state of legal residence is not the same thing as your home of record, and it is the one that governs how you are taxed. Confirm anything on this page with a tax professional before you make a decision based on it.

Not every agent at Fort Campbell is licensed in both states.Ask yours before they show you a single house.

An agent licensed in one state can only show you half of this decision. If you are still weighing both sides, working with someone licensed in both lets you see the whole market before you narrow it.

Jennifer Lundberg, licensed in Kentucky and TennesseeWhat Mission Ready Means

Last reviewed November 2026 · Maintained by My Military HQ

Common Questions

Questions families ask

Does Kentucky tax active duty military pay?

No. Kentucky exempts all active duty military pay from state income tax, and has since 2010. No Kentucky withholding is required on it.

Does Tennessee have a state income tax?

No. Tennessee's last income tax, the Hall tax on interest and dividends, was fully repealed for tax years beginning January 1, 2021.

Is military retirement pay taxed in Kentucky?

Partly, and how much depends on your service dates. Kentucky excludes up to 31,110 dollars of pension income. Military retirees may be able to exclude more, because pay tied to federal service before January 1, 1998 can qualify for a larger exclusion calculated on Kentucky Schedule P. Tennessee has no income tax, so retirement pay is not taxed there at all.

Which side of Fort Campbell is cheaper overall?

It depends on where your household income comes from. Active duty pay is a wash, because neither state taxes it. Military retirement pay and a Tennessee paycheck generally favor the Tennessee side. Day to day spending favors the Kentucky side, because Kentucky charges 6 percent with no local sales tax anywhere in the state, while Tennessee charges 7 percent plus a local rate that varies by county and city.

Can one agent show me homes on both sides of the state line?

Only if that agent holds a real estate license in both Kentucky and Tennessee. An agent licensed on one side only is limited in the homes they can show you.

Sources

Where every number came from

Government sources establish every rule on this page. Independent data is used only for comparison between the two states.

Government Sources

Comparative Data Only

A Clarksville or Montgomery County specific sales tax rate is deliberately not published here. Available sources disagree on the exact combined figure, and the rate that applies to a given address should be confirmed with the Tennessee Department of Revenue rather than taken from this page.

Also In This Series

Military Home Resource Center

Buying in the National GuardFour ways a Guard member qualifies for a VA loan, and the one that changed in 2021.Flood risk in western North CarolinaWhy flood zone status is not fixed, and what it costs you on a VA loan.Living south of MacDill, in Manatee CountyOne published fact about the base's school liaison, and the trade you are actually making.Working at Blanchfield: what shift work changesTwo homes the same distance from post, and only one of them works at 0400. The variable is the gate.How long is the commute to Fort Bragg?Fort Bragg is not one destination. Which gate serves where you report changes the drive, and one of those gates is shut.Western NC winter accessRoad maintenance, driveway grade and layout, and why the house you tour in July is not the house you live in in January.VA loans and divorceWhat happens to the VA home loan benefit when a marriage ends, and what to ask VA.Sell or rent at PCSWhat orders change about selling or renting out your home near Sheppard AFB: the tax clock, your VA loan benefit and Texas homestead rules.Yuma commute and housingTwo bases, two directions: what each drive depends on, and how to test a home.Hampton Roads commute and housingBases on both sides of the water: the three ways across, and how to test a home.Virginia property tax for disabled veteransWho qualifies for Virginia's home exemption, what it covers, and how to apply before you buy.Assuming a VA loanWho can take over a VA loan, and what it can cost the seller's benefit later.The VA funding feeWho does not pay the VA funding fee, how to check your status before closing, and when VA refunds it.The VA appraisalWhat a home has to pass for a VA loan, what happens when the value comes in low, and the clause that protects your deposit.Surviving spouses and the VA loanWho VA covers, how remarriage changes it, and how to get your Certificate of Eligibility.The SCRA and your mortgageThe 6 percent rate cap and foreclosure protection: which mortgages count, how long they last, and how to ask.When new BAH rates come outThe yearly BAH calendar, why your rate can change, and what keeps it from going down.BAH and your mortgageUsing BAH for a mortgage, what sets it when you own, and what changes when you get orders.BAH and your VA loanHow a lender counts BAH, what grossing up means, and what changes if you move or leave the service soon.Western NC VA care and where you buyVA gives care at four places in western North Carolina. How to compare homes by where your care happens.Using a VA loan againHow a used VA home loan benefit comes back, what is left while an old loan is open, and the one-time rule.VA loan occupancy rulesWhat you sign at closing, and what still counts when you deploy, move in later, or move out on orders.Arizona tax on military retirement payWhy Arizona does not tax it, how a surviving spouse is treated, and what changes across the line in California.Iowa first-time home buyer programsThe first-time buyer rule, the exception if you served, and Iowa's military grant of up to $5,000.Sell or rent at PCS in Hampton RoadsWhat orders change about selling or renting out your home: the tax clock, your VA loan benefit and Virginia rules for owners who rent.CDD fees in Lakewood RanchWhat a CDD fee is, its two parts, and how to find the amount on a home before you buy.VA loans and your spouseWhether your spouse can use your VA loan, has to be on it, and how their income, debts and credit count.Buying sight unseen at Fort CampbellWhat you trade by buying before you arrive, how to check a home from far away, and how to sign.VA loans for the Guard and ReserveHow Guard and Reserve service opens the VA loan, the papers that prove it, and how drill pay counts.Texas property tax for disabled veteransWho qualifies for Texas's two disabled veteran exemptions, what the home exemption covers, and when it starts when you buy.VA loans and your dischargeHow VA treats a general, other than honorable or other discharge for a home loan, and how an upgrade can help.Quantico and Fort Belvoir commute and housingTwo bases on I-95: the gates, which way the express lanes run, and how to test a home.VA loans and your creditWhy VA sets no minimum credit score, what it checks instead, and how collections and late payments count.Texas tax on military retirement payWhy Texas does not tax it, and what changes across the line in Oklahoma.What the seller can payWhich closing costs a seller can pay on a VA loan, what counts toward VA's 4% limit, and the fees VA lets you pay.Virginia tax on military retirement payHow much of it Virginia leaves out, and what changes across the line in Maryland.Florida property tax for disabled veteransWho qualifies for Florida's full exemption and the smaller breaks, the active duty rules, and the refund for the year you buy.The VA streamline refinanceHow a VA streamline refinance (IRRRL) works, the tests the new loan has to pass, and what it costs.North Carolina tax on military retirement payWho North Carolina's deduction covers, a former spouse's share, and what changes across the line in South Carolina.VA loans after bankruptcy or foreclosureHow long the wait is, the two tests for 1 to 2 years, and what a foreclosed VA loan does to your benefit.