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Individual Income Tax Changes

Personal Income Taxes: Filing Estimated Tax Procedures Revised

When Governor Ernie Fletcher signed House Bill 272 on March 18, 2005, he approved the most extensive reform of Kentucky‚Äôs tax code in more than half a century.  Beginning with the 2005 taxable year, the following changes are in effect when calculating and submitting estimated tax payments for personal income tax.

-- The personal income tax rates for taxable years beginning on or after January 1, 2005 have changed.  The rate for taxable income over $8,000 but not over $75,000 is five and eight tenths percent (5.8%).  The current rate of six percent (6%) applies to taxable income over $75,000.

-- Individual owners of multi-member limited liability companies, single member limited liability companies, limited partnerships, limited liability partnerships, or S corporations that are now subject to the corporation income tax are not required to make individual income tax estimated payments based on the distributive share income of such pass-through entities beginning with the estimated payment due April 15, 2005.  Individual taxpayers that own an interest in one of these corporations will receive a share of the tax paid by the entity to use as credit against tax due on the pass-through entity's income on the individual return.  Check out information on how the corporation income tax applies to pass-through entities.

 -- HB 272 replaced the low income tax credit with a family size tax credit (FSTC) for those individuals and married couples whose modified gross income is less than 133% of the threshold amount determined under KRS 141.066.  The threshold amount is based upon federal poverty level for family size calculated by adding the taxpayers and dependent children living in the household up to four.  The 2005 threshold amount is expected to be $9,570 for a family size of one, $12, 830 for a family of two, $16,090 for a family of three and $19,350 for a family of four or more.  Modified gross income is equal to your federal adjusted gross income plus any interest income from other state municipal bonds and pension income from a qualifying lump sum distribution.


              2005 FAMILY SIZE TAX CREDIT CHART      

Family Size One

Family Size Two

Family Size Three

Family Size Four or More

Percent of Tax as FSTC

MGI is more than

MGI is not over

MGI is more than

MGI is not over

MGI is more than

MGI is not over

MGI is more than

MGI is not over

$0
9,570

9,953
10,336
10,718
11,101
11,484
11,867
12,154
12,441

$9,570
9,953
10,336
10,718
11,101
11,484
11,867
12,154
12,441
12,728

$0
12,830
13,343
13,856
14,370
14,883
15,396
15,909
16,294
16,679

$12,830
13,343
13,856
14,370
14,883
15,396
15,909
16,294
16,679
17,064

$0
16,090
16,734
17,377
18,021
18,664
19,308
19,952
20,434
20,917

$16,090
16,734
17,377
18,021
18,664
19,308
19,952
20,434
20,917
21,400

$0
19,350
20,124
20,898
21,672
22,446
23,220
23,994
24,575
25,155

$19,350
20,124
20,898
21,672
22,446
23,220
23,994
24,575
25,155
25,736

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%

-- Individual Taxpayers who can reasonably expect to have income of more than the threshold amount for filing a return and who expect to owe more than $500 in income tax may be required to make estimated tax payments. No declaration of estimated tax is required if the estimated tax liability can reasonably be expected to be five hundred dollars ($500) or less.

-- Individual income tax taxpayers who do not prepay at least 70 percent of their income tax liability for the year will be subject to a penalty for underpayment of estimated tax.

-- Taxpayers may pay the full amount in one payment on the earliest applicable due date or they may pay in installments.  Installments for calendar year 2005 are due on April 15, June 15, September 15, and January 17, 2006. 

-- If you have any questions regarding estimated payments, please call 502-564-4581.

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Last Updated 5/11/2005
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