Consumers begin to feel pinch of Kentucky state sales tax

Consumers begin to feel pinch of Kentucky state sales tax
Published: Jan. 4, 2023 at 5:47 PM EST
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LEXINGTON, Ky. (WKYT) - Several days into the new year and Kentuckians are beginning to feel the growing pains from the change to the state sales tax.

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Your first paycheck of 2023 should look a little bit bigger as the state income tax was reduced from 5% to 4.5%. However, some retirees and those on a fixed income won’t experience that break.

Eyes are now turning to consumption taxes as roughly 30 services saw changes to their tax structure in the new year. Like travelers to the Bluegrass Airport, who will now notice that 6% sales tax added to their parking fees.

“So the main change, due to that impact, is that we will no longer be accepting cash payment as you exit the parking lot at the Bluegrass Airport, so it will be card-only payment,” said Bluegrass Airport Community Relations Manager Lauren White.

Jason Bailey with the Kentucky Center for Economic Policy is worried that the current federal stimulus dollars won’t always be available.

“I’m concerned that it’s really only the beginning because the income tax is so expensive that there is a pretty large hole in the budget resulting, so this many only be the beginning of the sales tax increases we’ll see down the road,” said Bailey.

The State Legislature plans to reduce income tax by another half percent next year, down to 4%, and slowly phase out income tax altogether. However, many families experiencing a rise in inflation will see increased taxes on their summer camps, group fitness classes and even rideshare services.

“There will be a budget crunch,” said Bailey. “You can’t get something for nothing, and when you give away large tax cuts and don’t replace the lost revenue, you’re going to create a deficit at some point, so there will be that pressure.”

Dollars that could quickly add up as the year goes on.