Senate Republicans in Kentucky unveil tax rebate proposal
FRANKFORT, Ky. (AP) — Senate Republicans unveiled a tax-relief proposal Thursday that would deliver income tax rebates to Kentucky taxpayers in the latest proposal aimed at offering relief from rising consumer prices.
The legislation would grant state personal income tax rebates of up to $500 per individual and up to $1,000 per household, Sen. Chris McDaniel said. The proposal won quick approval from the Senate Appropriations and Revenue Committee, sending the measure to the full GOP-led Senate.
McDaniel, the committee chairman, portrayed his proposal as a way to put money back in the pockets of Kentuckians as they deal with the sting of surging inflation.
“As our nation is experiencing the highest inflation in 40 years, it’s important that lawmakers respond in a way that helps ease the burden on tax-paying Kentuckians,” McDaniel said.
The proposal capitalizes on the state’s massive revenue surpluses. The one-time rebates are expected to cost the state up to $1.15 billion, McDaniel said. If the proposal becomes law, the rebates should be distributed to Kentuckians by the end of this summer, he said.
In touting the measure, McDaniel said lower-income Kentuckians would have “a much higher percentage of their tax burden refunded to them.” Republican senators took turns praising the proposal after it was unveiled at the specially called committee meeting.
“I think to be able to share the financial success we’ve achieved over the last two or three years is timely, particularly given the inflation that we’re facing right now,” said Sen. Stephen Meredith.
After paying the rebates, the state would still have an anticipated surplus of about $800 million in the current fiscal year in addition to $1.5 billion in its budget reserve trust fund, McDaniel said.
Senate President Pro Tem David Givens stressed the ongoing importance of budget reserves “because the unknowns ahead are changing daily” — pointing to high inflation and the economic ripple effects from Russia’s invasion of Ukraine.
McDaniel said the proposal is “completely separate” from a much broader tax overhaul measure that could be introduced soon by Republican lawmakers. Budget and taxation measures are expected to dominate work in the final weeks of this year’s legislative session.
Last week, Democratic Gov. Andy Beshear endorsed legislation to temporarily cut the state sales tax rate to help cushion Kentuckians from rising consumer prices. The bill proposes a one-year cut in the state sales tax rate from 6% to 5%. That cut, if enacted, would deliver $873 million in tax relief for Kentuckians struggling with rising prices, the governor said.
Beshear also took executive action last week to grant relief to Kentucky taxpayers hit with pandemic-related increases in their vehicle property tax bills. The order — stemming from a surge in used car values — will amount to about $340 million in reduced vehicle property taxes, he said.
The tax rebate legislation is Senate Bill 194.