LOUISVILLE, Ky. (WDRB) -- Starting in January, Kentuckians will begin paying less income tax. But to pay for that dip in state revenue, lawmakers tacked on dozens of expansions to the sales tax.
House Bill 8 passed earlier this year, dropping the state's income tax from 5% to 4.5%. For a person who makes $60,000 salary, they currently give $3,000 in state income taxes. Under the new 4.5% rate, the same person would give $2,700.
But to offset that reduction, lawmakers incorporated 35 different new services into the state's existing 6% sales tax.
Do you want to get a tattoo or piercing? Do you want family photos? Do you want to rent a wedding venue? All that will be taxed.
Below is the full list of services that will now come with a 6% sales tax:
- Photography and photo finishing
- Marketing
- Telemarketing
- Public opinion and research polling
- Lobbying
- Executive employee recruitment
- Website design and development
- Website hosting
- Facsimile transmission
- Private mailroom
- Bodyguard services
- Security system monitoring
- Private investigation services
- Process server services
- Repossession of personal property
- Personal background check services
- Parking services
- Road and travel services
- Condo time-share exchange services
- Short-term rental of space
- Social event planning and coordination
- Leisure, recreational and athletic instructional services
- Recreational camp tuition and fees
- Personal fitness training
- Massage (non-medical)
- Cosmetic surgery
- Body modification (piercing, tattoos)
- Testing services
- Interior decorating and design
- Household moving
- Specialized design (fashion)
- Lapidary services
- Labor and services for commercial refrigeration
- Labor to repair or alter apparel, footwear, watches or jewelry
- Prewritten computer software access services
Kentucky Gov. Andy Beshear was critical of the impact of the sales tax increases, writing a two-page veto in April that was then overridden by the Republican supermajority.
Jason Bailey, executive director of the Kentucky Center for Economic Policy said expanding sales taxes is not projected to fill the deficit.
"That generates a little bit of revenue, but for every dollar in new revenue that those services taxes will generate, we're gonna lose about $6 in income tax revenues from the first cut alone," Bailey said.
Bailey used "first cut" in reference to lawmakers' intent to continue to incrementally lower the income tax rate over the next few years.
Beshear was also critical of the ambiguity in the list saying it will be difficult for these industries to navigate.
Both tax changes go into effect Jan. 1, 2023. For more detailed definitions of each category from the Kentucky Department of Revenue, here and here.
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