On April 13, 2022, the Kentucky legislature voted to override a gubernatorial veto to enact House Bill 8 which provides for a reduction of the individual income tax rate and an expansion of sales and use taxes with an effective date of January 1, 2023.
The new law reduces the individual income tax rate to four percent and extends sales and use taxes to certain services such as cosmetic surgery services, clothing alteration and repair services, marketing services, and prewritten computer software access services. However, businesses whose gross receipts do not exceed $6,000 in a calendar year are exempt from the tax, as was the case for services taxable prior to this law.
Additionally, the law modifies the definition of “use”, for tax purposes, to account for the services which are now subject to sales tax.
Finally, the new law imposes a six percent excise tax on motor vehicle rentals and rideshares, with or without a driver. While simultaneously exempting certain driving services from sales tax.
The full text of the bill may be found here.
