LOUISVILLE (WHAS11) -- Lawmakers have passed the first significant change to the Kentucky tax code in more than a decade. But what does it mean for you and your family?
The biggest change, according to experts, is a smaller state income tax. Many people will be paying less, with the tax-rate will change to a flat rate of 5-percent for everyone. That is a change from the previous tax bracket system.
"All of your other regular deductions have been eliminated. So, if you're a household that did a lot of deductions, you actually may see an increase," UofL Economics Professor Jose Fernandez said.
Another big change comes in the form of a new tax on a long list of services you've never paid taxes on before. The ones most likely to affect you include fitness centers, pet care, and car mechanics.
Business owners said the only change for them would be collecting taxes from customers. But experts said it could have a negative impact on the business, with customers choosing to forgo the service in lieu of paying the tax.
"It will affect the business in the sense that they're going to see fewer consumers and so it could push out some smaller businesses, people who are closer to that zero profit line," Fernandez said.
Lawmakers are also aiming to make this state healthier with a 50-cent increase on the cigarette tax.
"The key thing with lots of these taxes is we actually want to start new smokers from starting- it’s really tough for people to quit smoking so even when you increase the price on them, they will still continue to smoke- they will just smokeless," Fernandez said.
Supporters said the mix of tax cuts and increases would make Kentucky more competitive with surrounding states.
Governor Bevin will have the chance to do a line by line veto before he passes the bill into law.
