Jan. 1 Kentucky income tax slashed .5%

34 tax-exempt services to be taxed 6%

BOWLING GREEN, Ky. – Effective immediately this new year, your state income taxes will start slowly lowering, but at a cost. 

The GOP-backed law will drop your state income tax by 0.5 percent starting January first. Republican lawmakers hope to completely eliminate Kentucky’s current 5 percent state income tax by 2032. 

The idea behind moving the income-based tax to more of a consumption-based tax aims to propel the Kentucky population- setting up the Commonwealth for the same exponential growth as a few surrounding states. 

To make up the difference, though, over 30 statewide tax-exempt services will now shoulder a six percent sales tax. That will be certain Massage, cosmetic, rideshare, and photography services, just to name a few.

Also, some folks who own multiple properties will a 6 percent tax on their utilities, including electric, water, and sewage taxes. 

Bowling Green’s Studle Financial Services accountant Hunter Studle said, “Down the road in the future years, I believe that it’s going to be a good thing for the state. I think it will generate more revenue than actual income tax…. If we get down to 0 percent state income tax, that’s going to be far more progressive than a lot of these states where you’re paying upwards of 20 plus percent state income tax.”

Click here to learn more about House Bill 8’s upcoming changes.