AN ACT relating to a Kentucky working credit.

Create a new section of KRS Chapter 141 to establish a refundable Kentucky working credit equal to 30% of the federal earned income credit allowed for the taxable year; a taxpayer's modified gross income to be in excess of the amount eligible for the family size tax credit allowed in KRS 141.066(limit the credit to $2,000 per taxable year; make credit effective for taxable years beginning on or after January 1, 2027, but before January 1, 2031; amend KRS 141.0205 to order the credit; amend KRS 131.190 to allow the Department of Revenue to report on the credit.

Introduced: February 26, 2026

Last action: March 5, 2026

To Appropriations & Revenue (H)

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This bill would create a new state tax credit called the Kentucky working credit, giving eligible taxpayers a refund equal to 30% of their federal earned income credit, up to $2,000 per year. The credit would be available for tax years 2027 through 2030 and would be limited to taxpayers whose income is above the threshold for an existing state family size tax credit. The bill also allows the Department of Revenue to report data on how the credit is used. Who it may affect: lower- and moderate-income working Kentuckians who currently qualify for the federal earned income credit.

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