State Tax Revisions in Kentucky
Issue Overview: In a smashing victory, small businesses with less than $3 million gross profit were exempted from the alternative minimum tax. In addition, federal conformity for LLC, LLP and S-corporation filings was restored, allowing small-business owners to return to filing state taxes as an attachment to their personal returns.
NFIB Position: Many businesses with high volume/low profit operations continue to suffer under the alternative minimum tax. They need increases in the deductible amount to provide relief. In addition, payments of the tax need to be made refundable to ensure that small business owners do not lose the credit on their personal taxes.
The consequence of this scheme is that entrepreneurs are being discouraged from starting new ventures. An appropriate solution would be a three-year phase-in of the return of this credit. This will minimize impact on the state budget, while providing relief to small-business entrepreneurs.
Issue Status: Legislation is expected to be filed in the 2008 General Assembly to address this issue. Please contact your state senator and representative, and ask them to allow small businesses to net losses through offsetting.
