FRANKFORT, Ky. — A bill that could give some Kentuckians a $1,000 tax rebate moved out of the Senate on a near party-line vote Monday.
Individuals who paid personal income taxes in the calendar year 2020 would be for a tax rebate up to $500 dollars and households would be eligible for up to $1,000 under Senate Bill 194.
Sen. Chris McDaniel, R-Taylor Mill, who is sponsoring the bill said this rebate will bring relief to Kentuckians and help with rising inflation.
"The biggest issue confronting Kentuckians right now is inflation and we're optimistic that this is something that will help them confront that issue, using the dollars that they had already sent to the government," McDaniel said.
If passed, McDaniel said people could start seeing payments as early as this spring and said those eligible won't need to apply for the program.
The rebate program would cost the commonwealth $1.15 billion.
The state is sitting on a large cash reserve right now, which is how McDaniel said they're able to fund it.
During the Senate floor debate Monday, several Democrats spoke about their concerns about voting on this bill before passing a state budget.
"We're voting on a $1.15 billion project in the budget, but we haven't voted on the budget yet," McGarvey said.
If you didn't pay any personal income taxes in 2020 or were claimed as a dependent you won't get this rebate.
That includes some people claiming retirement benefits.
"A married couple can be paid $62,200 per year plus each of their social security benefits, which depending on income brackets and stuff can be up to $120,000 per year in retirement income, and draw it completely tax-free," McDaniel said. "If you were drawing that much tax-free, then yes, you would not qualify because you wouldn't be a taxpayer."
McGarvey said while he supports using the state's excess revenue surplus to help people, he doesn't think this bill is the right way to do it.
"This bill only gives a rebate to people who made a certain amount of income taxes last year," McGarvey said. "That wipes out a lot of seniors who are either on a fixed income or retired."
While the Senate tax rebate bill looks backward to provide relief for Kentuckians, a bill working its way through the House (House Bill 8), looks forward.
If passed, the state's income tax would be lowered from 5% to 4% starting in January of 2023.
Then, - every year after that so long as the state brings in enough revenue, Kentucky's income tax would decrease another half percentage point until it reached zero.
Years the state doesn't bring in enough revenue, the income tax rate will be held at ever the current rate is that year.
SB194 now heads to the House for consideration.
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