2018 Kentucky Income Tax Changes - Department of Revenue
2018 Kentucky Income Tax Changes
Kentucky Department of Revenue
Webinar Agenda
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House Bill 487
IRC and TCJA Conformity
Individual Income Tax
Corporate Income Tax
Tax Credits
Property Tax
Miscellaneous
Acronyms
Contact
House Bill 487
Became Law on April 27, 2018
? Most substantial Kentucky tax law changes since 2006
? Sales and excise tax changes not covered here
? Effective Dates:
¨C January 1, 2018
? Flat 5% income tax rate for individuals and corporations
? Elimination of many individual income tax deductions
? IRC conformity for income tax updated to December 31, 2017 including
the TCJA (Pub. L. 115-97)
? Single sales factor
? Market-based sourcing
¨C January 1, 2019
? Unitary combined and elective consolidated group filing
IRC and TCJA Conformity
? IRC conformity date now December 31, 2017
? TCJA provisions adopted with IRC conformity
? Kentucky Adopted from TCJA:
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Net Operating Loss changes (IRC ¡ì172)
Net Interest Expense limitation (IRC ¡ì163(j))
Domestic Production Activity Deduction repeal (IRS ¡ì199)
Foreign Derived Intangible Income-FDII (IRC ¡ì250)
Moving Expense Deduction repeal (IRC ¡ì132)
Moving Expense Reimbursement Exclusion repeal (IRC ¡ì217)
Alimony Payment Deduction repeal (IRC ¡ì215)
Alimony Received Inclusion repeal (IRC ¡ì61)
? Kentucky Decoupled from TCJA:
¨C Full Depreciation Expensing (IRC ¡ì168(k))
¨C Pass-Through Entity QBI deduction (IRC ¡ì199A)
Individual Income Tax
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Effective January 1, 2018
Flat tax rate of 5% for all individuals
Pension exclusion decreased to $31,110 from $41,110
$10 personal tax credit for taxpayers and dependents
eliminated
Retained personal tax credits for >age 64, blind, and
National Guard
Adjustments Eliminated:
¨C Deduction for health insurance premiums
¨C Deduction for long-term care insurance premiums
¨C Master Tobacco Settlement Payments
¨C Deduction for homeless shelter leasehold interest donation
? STABLE investment income now tax exempt
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