If passed, a Kentucky bill would exempt active-duty police officers from paying the state’s five percent income tax required of all residents.
House Bill 141, sponsored by Rep. Ryan Dotson and supported by the Kentucky Fraternal Order of Police, aims to make law enforcement a more appealing profession through tax cuts.
“People have stopped … becoming police officers,” Dotson told the Lexington Herald-Leader. “So we’re trying to incentivize people who go into and stay in that line of work by passing something that will appeal to them financially.”
The bill covers local police, sheriff’s department and Kentucky State Police personnel and would be effective for the 2022 tax year. When asked about why the bill does not include public service workers like firefighters or nurses, Dotson said discussion is ongoing.
Dotson also mentioned the police shortage in the state as a reason for the bill’s focus on law enforcement.
“Oh yeah, all of them have approached and are talking to us about that. My thing is, I want tax reform in the state of Kentucky. I want to do away with state income taxes altogether. But, being what it is, police officers are, you know, they protect and serve, and we are running short on those right now,” Dotson explained.
Dotson hopes to introduce tax reforms for many professions but plans to start with police officers.
“I’d like to include others, and we may very well down the road,” he said. “But I think this will be the first step.”
According to the Lexington Herald-Leader report, Kentucky currently excludes taxation of military pay from active-duty members of the armed services, as well as for senior citizens. The state does not tax Social Security, pensions or retirement income either.
Patrol officers in Kentucky earn a mean annual salary of $45,000, while detectives and criminal investigators can make over $75,000, according to the U.S. Bureau of Labor Statistics.
There is currently no fiscal note on the bill regarding its impact on state revenue, but a similar measure proposed in Missouri last year would have cost the state $35 million.
Kentucky lawmakers have considered implementing further tax code reforms by reducing overall state income taxes in favor of higher sales taxes. This change began in 2018 when the state cut top income taxes but was able to raise hundreds of millions of dollars by raising sales taxes on services.