January 13, 2015


State & Local Taxes in 2015


Kentucky Tax Code Features

Progressive Features

• Graduated personal income tax structure

• Provides an income tax credit for child and dependent care expenses

• Provides a low-income tax credit linked to the federal poverty level

• Sales tax base excludes groceries

Regressive Features

• Fails to provide refundable income tax credits to offset sales, excise and property taxes

• Fails to use combined reporting as part of its corporate income tax

Tax Changes Enacted in 2013 & 2014

• Personal income tax credits were reduced from $20 to $10 for single filers (from $40 to $20 for married couples)

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Kentucky has the 33rd most unfair state and local tax system in the country. States with regressive tax struc­tures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Appendix B for state-by-state rankings and more details).

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