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Bill that would lower Kentucky's income tax, add tax to other services passes House

As long as certain trigger points are met, the bill would eventually reduce the personal income tax rate to zero.

FRANKFORT, Ky. — A bill that would lower Kentucky's personal income tax rate and extend the sales tax to more services has been passed by the House.

House Bill 8 cleared the House on a 67-23 vote after a long debate Friday. Under the bill, the state's 5% individual income tax rate would be lowered incrementally over a period of years until it is eliminated.

The first reduction would be on Jan. 1, 2023, when the rate would drop to 4%. If a certain amount of revenue is brought in that year, it would go down by another 0.5%.

As long as certain trigger points are met, the bill would eventually reduce the personal income tax rate to zero.

The percentage-point drop would save taxpayers an estimated $1 billion.

In order to keep taxes balanced, the bill would add sales tax to a number of services like rideshare apps, rental services like Airbnb, and advertising services.

On Friday, lawmakers discussed including a tax on electric vehicles in the bill. Those in favor of adding it said taxing electric vehicles would make it equivalent to the current gas tax.

“Stop the old thought process — tax it, spend it," GOP Rep. Jason Petrie said. "We had a good 100-year history of that here. And our numbers and our results are not appealing at all.”

Democrats opposing the measure said it would disproportionally benefit wealthier Kentuckians and could deprive the state of revenues needed to properly finance schools and other essential services.

“I don’t think the math adds up,” Democratic Rep. Rachel Roberts said. "And I also think that this is regressive. I think it hurts poor people in our state. I think it favors wealthy people in our state.”

Now that the bill has passed the House, it will go into the Senate xxx committee. HB 8 will have to pass the full Senate before it goes to Gov. Andy Beshear's desk for his signature.

The Associated Press contributed to this article.


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