March 30, 2022 11:17am
Greater Louisville Inc. celebrates passage of major state tax reform bill
Louisville, Ky. (March 30, 2022) – Yesterday, the General Assembly passed one of Greater Louisville Inc.’s top legislative priorities of 2022, House Bill 8, which will modernize Kentucky’s tax structure to make the state more competitive in attracting top businesses and talent. Specifically, House Bill 8 will lower the state’s personal income tax, which is currently at five percent, incrementally over a period of years until it is eliminated.
“When it comes to competing for corporate investment and bringing top talent to our region, we have always struggled to keep up with competitive tax structures in other states which are more favorable for businesses and workers,” said Sarah Davasher-Wisdom, GLI president and CEO. “House Bill 8 was a top priority for Greater Louisville businesses this year because we believe it will help prepare our state and regional economy for continued growth in the years and decades to come.”
The income tax will decrease by 0.5% if by the end of the year, revenues brought in exceed spending and there are extra funds equal to a 1% drop in the personal income tax. The Senate also added that these decreases can only occur if at least 10% of receipts go into the Budget Reserve Trust Fund and that the General Assembly must return to Frankfort to allow the first lowering to happen based on the triggers. In addition, the General Assembly included provisions to broaden the tax base by extending sales taxes and user fees to a number of service and requirements that the state must meet additional revenue targets before additional rate reductions can occur. The legislation was sponsored and championed by Chair of the House Appropriations and Revenue Committee, Jason Petrie (R – Elkton).
“House Bill 8 will keep Kentucky and Greater Louisville competitive, ensure our tax structure is meeting the needs of our businesses and workers, and help us attract top talent to our region,” said Shelby Somervell, GLI’s vice president of government affairs and communications. “We are grateful for Representative Petrie’s leadership on this issue and thank Senator McDaniel for helping get it across the finish line in the Senate.”
The bill now heads to Governor Andy Beshear to be signed into law. Despite speculation leading up to the legislative session, the bill did not include changes to the corporate tax rate or limited liability entity tax (LLET).