When is Tax Reform Coming? An Update on Potential Federal and Kentucky Tax Changes.
Published on by Nick Pennekamp in Tax Services
With major tax provisions in the 2017 Tax Cuts and Jobs Act (TCJA) set to expire at the end of 2025, and in light of the recent election, many taxpayers are left wondering when they will know what lies ahead with regards to future tax laws. The Trump administration has indicated it wants to push new tax policies, but experts believe that Republicans plans to prioritize immigration and border security funding through the first budget reconciliation bill, which could delay or complicate tax reform.
Looking back to 2017, Trump did not sign the tax bill until almost a year into his term. Could we be in for a similar timeline for 2025 tax changes? Grover Norquist, founder and president of Americans for Tax Reform, is warning the slim GOP majority that, “to delay is to kill,” when it comes to tax legislation. Despite these hurdles, most experts believe Congress will ultimately act to extend the expiring tax provisions, as failing to do so would lead to significant tax increases for individuals and businesses.
Implications for the state of Kentucky
Switching gears to the state side – Kentucky is on track to reduce its individual income tax rate from 4% to 3.5% in 2025, as the state meets required revenue and budget benchmarks. Kentucky reduces its income tax by 0.5% annually if specific financial conditions are met, including a sufficient budget reserve and general fund revenues. Governor Andy Beshear supports the tax cut, citing the state’s strong economy, but cautions against potential revenue shortfalls in the future. Kentucky failed to meet the triggers for 2024 but the tax cut reflects ongoing bipartisan efforts despite tensions between Beshear and the Republican-dominated legislature.
Our tax experts work hard to stay up-to-date on the latest tax implications. If you have any questions about how potential tax legislation could impact your company’s financial footing, contact us to schedule your free consultation. You can watch our Annual Tax Update on-demand for a deeper dive into the current tax environment, and what to expect in the coming year, or read our blog outlining the implications on the TCJA. As always, we’re here to help.