Bill > HB189

This bill creates a new tax credit for Kentucky employers who contribute to their employees' Kentucky Educational Savings Plan Trust accounts or STABLE Kentucky accounts. Starting in 2026, employers can claim a nonrefundable tax credit equal to 20% of their contributions, with a maximum credit of $500 per employee per year. The credit can be carried forward for up to five years if not fully used in the current tax year. To claim the credit, employers must provide detailed information on their tax returns, including the employer's and employee's identifying information and the contribution amount. The Department of Revenue is required to report annually to the Legislative Research Commission, providing details about the number of returns claiming the credit, total credit amount, and a breakdown by income ranges. The bill also amends existing tax credit ordering rules to specify where this new credit falls in the sequence of credits that can be applied against state taxes. Importantly, the Kentucky Educational Savings Plan Trust and STABLE Kentucky accounts are specialized savings accounts designed to help individuals save for educational or qualified expenses, with this new tax credit intended to encourage employer participation in supporting such savings.