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Kentucky bill increases scope of sales tax on services

Written on May 5, 2022

OSCPA staff report 

A Kentucky bill ratified on April 13 will significantly impact the state’s tax code for individuals and businesses. 

After being approved in Kentucky’s House and Senate, House Bill 8 was vetoed by the state’s Gov. Andy Beshear. However, the Republican supermajority overrode the Governor’s veto in the last two days of the Kentucky General Assembly’s recent session. 

Under H.B. 8, the state’s 5% individual income tax will be lowered gradually by 0.5% over a period of years if key trigger points are met. The bill will broaden Kentucky’s sales tax base and impose new taxes on certain services in high-growth industries such as entertainment, personal fitness, ride sharing, and electric and autonomous vehicles. Sales tax on accounting services is not listed.   

As we reported in January, Kentucky’s almost $2 billion surplus from its general fund means lawmakers have more possibilities for creating impactful tax legislation, unlike previous years. 

OSCPA has successfully defeated past efforts in Ohio to assess sales tax on CPA services and will keep a close eye on this new Kentucky law and sales tax on services proposals brewing across the nation.  Indiana also recently fended off a proposed base expansion. 

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