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Kentucky | Tax Credits for Working Families

Tax Credits for Working Families

Kentucky

Earned Income Tax Credit^

Income Tax Rate: Graduated 2-6 percent

State EITC: No

Notes/News: In December 2012, the Governor’s Blue Ribbon Commission on Tax Reform’s final report recommended creating a state EITC at 15 percent of the federal credit.  In February 2014, the Governor proposed a tax reform plan that would create a refundable EITC at 7.5 percent of the federal credit.

Reports/Materials: Statement on Governor Beshear’s State of the Commonwealth Address, Kentucky Youth Advocates, February 2013

Kentucky State & Local Taxes, from Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy, January 2013

Myths and Facts about an Earned Income Tax Credit in Kentucky, Ashley Spalding, Kentucky Center for Economic Policy, September 2012

Should Kentucky adopt a credit that is based on the federal Earned Income Tax Credit? Kentucky Chamber of Commerce, August 2012

A State Earned Income Tax Credit Would Help Kentucky Families and Local Economies, Kentucky Youth Advocates, April 2012

Fact Sheet: Earned Income Tax Credit, Representative Clark: District 46, Kentucky Youth Advocates

Enact a State, Refundable Earned Income Tax Credit, Blueprint for Kentucky’s Children

Kentucky: State and Local Taxes in 2007, Institute on Taxation and Economic Policy, November 2009

A State Earned Income Tax Credit: Issues and Options for Kentucky, Erica Meade and James P. Ziliak, University of Kentucky Center for Poverty Research

A State-Earned Income Tax Credit Would Help Kentucky’s Working Families, Kentucky Youth Advocates, January 2008

Articles: Tax Credit for Families Proposed, Herald-Leader, February 28, 2008

Child Tax Credit^

State Credit: No

Child and Dependent Care Tax Credit^

State Credit: Yes

Refundable: No

Eligibility: Same as the federal credit.

Formula: Filers may claim a credit equal to 20 percent of their federal credit, not to exceed the filer’s tax liability, up to $210 for one child and $420 for two or more children.

Notes/News: The Kentucky Office of State Budget Director estimates that Kentuckians will claim approximately $8.3 million worth of state child and dependent care credits in FY 2012.1

In 2012 Kentucky advocates worked to expand the CDCTC and make it refundable. Because in 2012 the state faces a significant budget crunch, the governor did not include this change in his budget proposal. However, the governor has formed a tax commission to make recommendations by November 2012 and an expanded CDCTC could be one of the recommendations of that commission.

Reports/Materials: Make the State Child and Dependent Care Tax Credit Refundable, Blueprint for Kentucky’s Children

Property Tax Circuit Breaker^

Circuit Breaker: No

Reports/Fact Sheets: Idea 9: Enact a Property Tax Circuit Breaker,” Sarah Beth Coffey and Alan Essig, Center for a Better South, Doing Better: Progressive Tax Reform for the American South, June 2006

1 Tax Expenditure Analysis, Kentucky Office of State Budget Director, October 2009