Earned Income Tax Credit^
Income Tax Rate: Graduated 2-6 percent
State EITC: No
Notes/News: Kentucky advocates continue working on enactment of a state EITC. In 2012 the state faces a significant budget crunch, and the governor did not include a new EITC in his budget proposal. The governor has formed a tax commission to make recommendations by November 2012 and those recommendations might include creating an EITC.
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 EITC. In January 2013, Lt. Gov. Jerry Abramson announced there is a possibility that a special session may convene this year, in which case the legislature would consider implementing the Commission’s recommendation. If it does not, the earliest that the EITC proposal would be considered would be 2014.
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
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