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Bill

SB 81

AN ACT relating to the Kentucky child credit.

2026 Regular Session

SB 81 would create a Kentucky child tax credit to reduce state tax liability for eligible families, with amounts, refundability, and income rules defined in the bill.

to Committee on Committees (S)
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Bill Summary · SB 81

Summary of SB 81 (2026RS) — Kentucky: AN ACT relating to the Kentucky child credit

Purpose and intent

  • SB 81 proposes the establishment or modification of a Kentucky child credit program. The bill is framed to provide direct financial support to eligible families with dependent children, leveraging state revenue to offset some costs of childrearing.
  • The overall aim is to expand or formalize a state-level tax credit mechanism to reduce the after-tax cost of raising children for qualifying households.

Key provisions and changes

  • Eligibility and amount (detail may be specified in the bill text): SB 81 sets criteria for who qualifies for the Kentucky child credit, including factors such as filing status, residency, income thresholds, number of dependent children, and other potential qualifiers (e.g., age of dependents, relationship to the taxpayer).
  • Credit type and mechanics:
    • The bill designates the credit as a nonrefundable or refundable (or partially refundable) tax credit against Kentucky individual income tax liability. The exact refundability affects whether even taxpayers with no tax due can receive the benefit.
    • The credit amount is defined—either as a fixed sum per qualifying child, a percentage of earned income, or a combination (e.g., base amount plus adjustments by income level or family size). The specific formula determines the total credit a household could receive.
  • Interaction with other credits:
    • Provisions may specify how the Kentucky child credit interacts with the federal child tax credit, other state credits, or the federal income tax system to avoid duplication or miscounting.
  • Phase-in or phase-out:
    • There may be income-based phase-in/phase-out ranges, altering credit eligibility or amount as household income rises.
  • Administration and claiming:
    • The bill outlines how taxpayers claim the credit (e.g., on state individual income tax returns), required documentation, and any administration by the Kentucky Department of Revenue.
  • Sunset or renewal clause:
    • SB 81 could include a sunset provision (requiring future legislative action to continue beyond a certain date) or a mechanism for automatic renewal or periodic review.

Affected parties and impact

  • Taxpayers:
    • Eligible Kentucky residents with qualifying dependent children could receive a reduction in state tax liability or a refundable payment, depending on the credit structure.
    • Low- and middle-income families are typically the primary beneficiaries if income-based eligibility and larger per-child amounts exist at lower income levels.
  • Children and families:
    • By providing financial support, the bill aims to ease costs associated with childrearing, potentially affecting household budgets, savings, and discretionary spending.
  • State budget and revenue:
    • The credit represents a cost to the state’s general fund or designated revenue streams. Depending on the credit’s size and whether it’s refundable, the bill could impact annual state revenues and require appropriations or budget adjustments.

Procedural and timeline aspects

  • Status: Introduced in the Senate on January 13, 2026, and referred to the Committee on Committees (S) for consideration.
  • Next steps likely include:
    • Committee hearings and potential amendments.
    • Floor votes in the Senate, followed by potential consideration by the House of Representatives.
    • If passed, signatures by the governor and potential implementation date, with effective tax year alignment (e.g., credit available for tax year 2026 or 2027, depending on the bill’s language).

Note: This summary reflects the bill’s stated purpose and typical design elements for a state child credit. For precise eligibility criteria, credit amounts, refundability, interaction with other tax provisions, and effective dates, consult the enrolled bill text and any fiscal notes or committee substitute that accompany SB 81.

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

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