A bill to lower the state income tax in Kentucky was approved by the Kentucky House.
The bill, which will now be up for approval in the state senate, reduces the state’s personal income tax from 5 percent to 4 percent, beginning next year, but the bill makes plans for the state income tax to continue to decrease over the next few years.
As long as the state meets certain revenue thresholds, the income tax rate would continue to decrease by .5% or 1% each year until the personal income tax rate hits zero.
At the end of each fiscal year, the Department of Revenue will look at whether actual state revenues, not an estimated amount, meet one of the “trigger” requirements to lower the state income tax rate by either a half or full percent.
Under HB 8, in order for the income tax rate to decrease by a half percent, the general fund must see a $1 billion increase in revenue.
And as the tax rate goes down, it can’t be brought back up except by passing legislation.
To make up for losses, which are estimated to be around $1 billion according to the Kentucky Center for Economic Policy, the bill would expand what services would become taxable.
A few services that will begin being taxed include photography, website design, pleasure watercraft docking and launching along with storage, event space rentals, personal financial planning and investment management, and more.
The bill passed through the House 67-23. Rep. Josh Branscum voted in favor of the bill.
