Late Wednesday evening, the state House and Senate passed a finalized tax reform package agreed on earlier in the day and sent the “clean up” legislation to the governor’s desk.
The final version of House Bill 354 contains fixes for how nonprofits are treated under the tax code and exempting them from the sales tax, addresses an income tax “gap” by giving a tax credit to low-income Kentuckians, removes the bank franchise tax of more than 13 percent and puts banks under the 5 percent corporate income tax, addresses the issue presented with the taxation of services and examples such as teenagers mowing lawns in the summer potentially having to collect taxes, and more.
Language on combined reporting was also discussed with legislative leaders saying that they would not repeal the mandatory combined reporting requirement passed in the 2018 tax plan. The business community has advocated for the repeal of this item, as it puts Kentucky at a competitive disadvantage.
Learn more about the tax reform clean up packages in the following stories on The Bottom Line:
The Senate voted on the policy first and passed the bill with a 34-3 vote before sending it down to the House where it received final passage with an 87-8 vote.
The bill now heads to the governor’s desk for consideration. Gov. Matt Bevin will either sign the amended bill or issue a veto. Because it is a revenue measure, the governor can also line-item veto specific provisions of the bill. If he decides to veto any part of the tax clean up bill, the legislature could override that veto on the final legislative day on March 28.