The sections below highlight several prominent legislative, administrative, and procedural developments and their impact on Kentucky taxpayers.
I. 2018 Kentucky Tax Legislation
A. Kentucky Tax Reform
The 2018 Kentucky General Assembly enacted tax reform in two bills: House Bill 366 and House Bill 487. These include a number of important provisions that should be of great interest to many taxpayers. Among other things, the new laws:
Income Tax Changes (Generally effective for tax years beginning on or after 1/1/2018)
• Reduce the top marginal corporate income tax rate to a flat 5%. Reduce the top marginal personal income tax rate to a flat 5%.
• Update the Internal Revenue Code reference date within the Kentucky tax code to be December 31, 2018 to conform to the Tax Cuts and Jobs Act of 2017, with certain exceptions, e.g., 100% depreciation deduction, Section 179 expensing, and the 20% Qualified Business Income deduction.
• Disallow the deduction for domestic production activities, which the Tax Cuts and Jobs Act also does.
• Apply a single-fact