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HB 167

AN ACT relating to a tax deduction for theft losses.

2026 Regular Session Introduced by Ken Fleming

Allows a Kentucky theft loss deduction to reduce taxable income for losses from theft, with rules on eligibility, calculation, and interaction with other deductions.

to Appropriations & Revenue (H)
#taxation #income--individual
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WeVote Research Nonpartisan
Bill Summary · HB 167

Bill Overview

  • Bill: HB 167
  • Session: 2026 Regular Session (Kentucky)
  • Jurisdiction: Kentucky
  • Title: AN ACT relating to a tax deduction for theft losses
  • Purpose: To create or modify a state tax deduction for losses resulting from theft, providing taxpayers with a mechanism to reduce tax liability due to stolen property or related theft losses.

Main Purpose and Intent

  • The bill aims to address theft losses by allowing taxpayers to claim a deduction against Kentucky taxable income for amounts lost due to theft.
  • The goal is to provide financial relief to individuals and/or businesses that suffer theft losses by recognizing these losses for state income tax purposes.

Key Provisions and Changes

  • Tax Deduction for Theft Losses:
    • Establishes, expands, or clarifies a deduction against Kentucky personal or business income tax for losses sustained from theft.
    • The deduction amount, eligibility, and calculation methodology would be defined (e.g., the gross theft loss minus any insurance reimbursement, up to certain limits, and subject to thresholds or limitations).
  • Eligibility Requirements:
    • Specifies who may claim the deduction (likely individual taxpayers and/or businesses that file Kentucky tax returns).
    • Potential documentation requirements to substantiate theft losses (police reports, insurance statements, appraisal of loss, etc.).
  • Interaction with Other Deductions/Credits:
    • Clarifies how the theft loss deduction interacts with federal theft loss rules and other Kentucky deductions.
    • Addresses whether the deduction can be carried forward or backward if applicable, and any caps or phase-ins.
  • Timing and Tax Year Application:
    • Establishes the tax year in which the deduction may be claimed (current year vs. retroactive to prior years).
    • Specifies whether the deduction is optional or mandatory for eligible taxpayers.
  • Compliance and Administration:
    • Outlines the Kentucky Department of Revenue’s role in administering the deduction, including forms, notices, and audit considerations.
    • Sets forth any reporting requirements for taxpayers claiming theft losses.

Who Would Be Affected

  • Individual taxpayers who suffer theft losses and file Kentucky personal income tax returns.
  • Businesses and small business owners subject to Kentucky corporate or pass-through taxation, depending on the bill’s scope.
  • Tax professionals and preparers, due to documentation and calculation requirements.
  • Insurance claim processes and law enforcement interactions may be relevant for substantiating losses.

Procedural and Timeline Aspects

  • Action History:
    • Introduced in the Kentucky House on 2026-01-07.
    • Referred to the Committee on Committees (H) on 2026-01-07.
    • Considered by Appropriations & Revenue committee (H) on 2026-01-14.
  • Next Steps:
    • The bill will likely undergo committee analysis, potential amendments, and subsequent votes in the House and Senate.
    • If advanced, it would proceed to the Senate for further consideration, with potential conference committee resolution if there are legislative differences.

Notes

  • Specific dollar amounts, deduction limits, carryover provisions, and exact eligibility criteria are not provided in the available summary. The final text would detail:
    • Maximum deduction per taxpayer/year
    • Treatment of insurance reimbursements
    • Whether damages from crimes other than theft (e.g., burglary, robbery) are included
    • Any caps or phaseouts based on income

This summary captures the bill’s general objective and likely operational framework for a theft loss deduction in Kentucky, pending the detailed statutory language. If you can provide the full bill text or fiscal note, I can deliver a more precise, line-by-line breakdown of the provisions and impacts.

Compiled from official sources — confirm details with the bill’s official record.

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