Kentucky has made the following changes to the tax laws for the 2018 tax year:
- Flat tax rate of 5% for all individuals.
- Pension exclusion decreased to $31,110 from $41,110.
- $10 personal tax credit for taxpayers and dependents eliminated.
- Personal tax credits remaining for individuals who are over the age of 64, blind, and in the National Guard.
- STABLE investment income now tax exempt.
- Dollar limit cap on itemized deductions eliminated.
- Deductions for health insurance premiums.
- Deductions for long-term care insurance premiums.
- Master Tobacco Settlement Payments
- Deduction for homeless shelter leasehold interest donation.
Itemized Deductions that will remain:
- Home mortgage interest, points, and qualified MIP
- Charitable contributions
- Several Miscellaneous Deduction
- amortizable premium on taxable bonds
- federal estate tax on IRD
- repayments greater than $3,000 under a claim of right
- unrecovered investment in an annuity
- Other activities loss from Schedule K-1 (box 2)
Itemized Deductions that were eliminated:
- Investment interest
- Casualty/Theft and gambling losses
- Medical and dental expenses
- Moving expenses
- 2% AGI miscellaneous deductions
- Eliminated Form 740-EZ
- Simplified Schedules A and M (itemized and federal modifications)
- New Schedule ITC for individual tax credits
- New Schedule INV for inventory credit