Schedule J: Kentucky Farm Income Averaging (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
Kentucky Schedule J lets you elect to figure your 2025 Kentucky income tax by averaging all or part of your taxable farming or fishing income over the previous three years. It uses Kentucky income and tax figures to calculate the tax and is enclosed with Form 740.
Who files this form
Kentucky Schedule J is an election to figure your 2025 Kentucky income tax by averaging all or part of your 2025 Kentucky taxable income from a farming or fishing business over the previous three years.
This election may lower your tax if your 2025 farming or fishing income is high and your taxable income for one or more of the three prior years was low.
You must file a federal Schedule J to complete Kentucky Schedule J.
What you'll need
- Your 2025 Kentucky Form 740, including taxable income from line 11.
- Your federal Schedule J. Kentucky elected farm income on line 2 cannot exceed federal Schedule J, line 2(a).
- The federal Schedule J instructions for definitions and the guidance referenced by Kentucky Schedule J.
- Copies of your original or amended 2022, 2023 and 2024 income tax returns, which you may need to figure the tax.
- Your prior-year Schedules J, if you used them to figure your tax for 2022, 2023 or 2024.
How to file
Enclose Kentucky Schedule J with Form 740. Enter your name or names as shown on your tax return and your Social Security number.
On line 22, subtract line 21 from line 17. If the result is less than the tax on the taxable income on line 1, enter the resulting tax on Form 740, line 12, and check the box.
Common mistakes
- Completing Kentucky Schedule J without filing federal Schedule J. The federal schedule is required.
- Using figures other than Kentucky figures. Use Kentucky figures when completing this schedule.
- Missing the other-state income calculation. If line 2 includes income from another state, also compute the tax without that income to determine the state tax limitation for the credit for taxes paid to other states.
- Using the same tax rate for every year. The listed rates are 5% for 2022, 4.5% for 2023, and 4% for 2024 and 2025.
- Not keeping your 2025 return. Keep a copy to use for income averaging in 2026, 2027 or 2028.
Questions people ask
Can fishing income qualify for this election?
Yes. The form covers 2025 Kentucky taxable income from a trade or business of farming or fishing.
Do I have to average all of my qualifying income?
No. You may elect to average all or part of it. The amount on Kentucky Schedule J, line 2, cannot exceed federal Schedule J, line 2(a).
Where can I find definitions of farming, fishing and elected farm income?
The form directs you to the federal instructions for those definitions.
What if the amount entered on line 5, 9 or 13 is zero or less?
The Kentucky instructions direct you to the federal instructions.
What if I used Schedule J in a prior year?
Follow the line-specific directions for the most recent applicable year you used Schedule J. Those directions identify which prior Schedule J amounts to use instead of the corresponding Form 740 amounts.