Starting January 1st, active military and reservists living in Kentucky will be exempt from paying the state income tax. Kentucky Governor Steve Beshear signed the legislation this month, partly as a way to entice the 30,000 soldiers at Fort Campbell to make their residence in the Bluegrass state.

Fort Campbell straddles the Tennessee/Kentucky line, and Sgt. Rick Rzepka says many younger soldiers choose to live on the Tennessee side to be closer to Nashville.

“You’ve got soldiers from Boston, L.A., and they miss that sort of city feel.”

Rzepka already doesn’t pay state income tax because he lives in Tennessee. With the new exemption, he says he’d be interested in relocating – if his wife approves – because of Kentucky’s lower sales tax rate.

A 6% sales tax and more affordable housing attracted Spc. John Bentley to a home in Kentucky. It’s close to Fort Campbell, he says, but not much else.

“I live in Oak Grove, and I can see why someone wouldn’t want to live in Oak Grove. There’s nothing there, you know.”

Kentucky economic development officials estimate the income tax exemption amounts to a 6-percent raise for soldiers. State legislators say it will reduce tax revenues by 18-million dollars in the short term but could create an economic benefit if enough families make the move.