KRS 141.066 — Definitions -- Nonrefundable low income, family size, and income gap tax credits

(1) As used in this section:
(a) "Federal poverty level" means the Health and Human Services poverty
guidelines updated periodically in the Federal Register by th e United States
Department of Health and Human Services under the authority of 42 U.S.C.
sec. 9902(2) and available on June 30 of the taxable year;
(b) "Qualifying dependent" means a qualifying child as defined in the Internal
Revenue Code, Section 152(c), and includes a child who lives in the
household but cannot be claimed as a dependent if the provisions of Internal
Revenue Code Section 152(e)(2) and 152(e)(4) apply;
(c) "Qualifying individual" means an individual whose filing status is single or
married filing separately if during the taxable year the individual's spouse is
not a member of the household;
(d) "Qualifying married couple" means a husband and wife living together who
file a joint return or separately on a combined return. "Marital status" sh all
have the same meaning as defined in Section 7703 of the Internal Revenue
Code; and
(e) "Threshold amount" means:
1. For a qualifying individual with no qualifying dependent children, the
federal poverty level established for a family unit size of one (1):
2. For a qualifying individual with one (1) qualifying dependent child or a
qualifying married couple with no qualifying dependent children, the
federal poverty level established for a family unit size of two (2);
3. For a qualifying individual with two (2) qualifying dependent children or
a qualifying married couple with one (1) qualifying dependent child, the
federal poverty level established for a family unit size of three (3);
4. For a qualifying individual with (3) or more qualifying dependent
children or a qualifying married couple with two (2) or more qualifying
dependent children, the federal poverty level established for a family
unit size of four (4).
(2) (a) For taxable years beginning before January 1, 2005, a resident individual
whose adjust ed gross income does not exceed the amounts set out in
paragraph (c) of this subsection shall be eligible for a nonrefundable "low
income" tax credit. The credit shall be applied against the taxpayer's tax
liability calculated under KRS 141.020, and shall be taken in the order
established by KRS 141.0205.
(b) For a husband and wife filing jointly, the "low income" tax credit shall be
computed on the basis of their joint adjusted gross income and shall be
applied against their joint tax liability. For a husband and wife living together,
whether filing separate returns or filing separately on a combined return, the
"low income" credit shall be computed on the basis of their combined adjusted
gross income, except that a separately computed gross income of less than
zero shall be treated as zero, and shall be applied against their combined tax
liability.
(c) The "low income" tax credit shall be computed as follows:
PERCENT OF TAX
AMOUNT OF ADJUSTED LIABILITY ALLOWED AS
GROSS INCOME LOW INCOME TAX CREDIT
not over $5,000 100%
over $ 5,000 but not over $10,000 50%
over $10,000 but not over $15,000 25%
over $15,000 but not over $20,000 15%
over $20,000 but not over $25,000 5%
over $25,000 -0-
(3) (a) For taxable years beginning after December 31, 2004, qualifying taxpayers
whose modified gross income is below one hundred thirty -three percent
(133%) of the threshold amount shall be entitled to a nonrefundable family
size tax credit. The family size tax credit shall be applied against the
taxpayer's tax liability calculated under KRS 141.020. The family size tax
credit shall not reduce the taxpayer's tax liability below zero.
(b) For qualifying taxpayers whose modified gross income is equal to or below
one hundred percent (100%) of the threshold amount, the family size tax
credit shall be equal to the taxpayer's tax liability.
(c) For qualifying taxpayers whose modified gross income exceeds the threshold
amount but is below one hundred thirty -three percent (133%) of the threshold
amount, the family size tax credit shall be equal to the amount of the
taxpayer's individual income tax liability multipl ied by a percentage as
follows:
1. If modified gross income is above one hundred percent (100%) but less
than or equal to one hundred four percent (104%) of the threshold
amount, the credit percentage shall be ninety percent (90%);
2. If modified gross income is above one hundred four percent (104%) but
less than or equal to one hundred eight percent (108%) of the threshold
amount, the credit percentage shall be eighty percent (80%);
3. If modified gross income is above one hundred eight percent (108%) but
less than or equal to one hundred twelve percent (112%) of the threshold
amount, the credit percentage shall be seventy percent (70%);
4. If modified gross income is above one hundred twelve percent (112%)
but less than or equal to one hundred sixteen perc ent (116%) of the
threshold amount, the credit percentage shall be sixty percent (60%);
5. If modified gross income is above one hundred sixteen percent (116%)
but less than or equal to one hundred twenty percent (120%) of the
threshold amount, the credit percentage shall be fifty percent (50%);
6. If modified gross income is above one hundred twenty percent (120%)
but less than or equal to one hundred twenty -four percent (124%) of the
threshold amount, the credit percentage shall be forty percent (40%);
7. If modified gross income is above one hundred twenty -four percent
(124%) but less than or equal to one hundred twenty -seven percent
(127%) of the threshold amount, the credit percentage shall be thirty
percent (30%);
8. If modified gross income is above o ne hundred twenty -seven percent
(127%) but less than or equal to one hundred thirty percent (130%) of
the threshold amount, the credit percentage shall be twenty percent
(20%);
9. If modified gross income is above one hundred thirty percent (130%) but
less than or equal to one hundred thirty -three percent (133%) of the
threshold amount, the credit percentage shall be ten percent (10%);
10. If modified gross income is above one hundred thirty -three percent
(133%) of the threshold amount, the credit percentage shall be zero.
(d) For taxable years beginning on or after January 1, 2019, but before January 1,
2021, in addition to the credit calculated under paragraphs (a), (b), and (c) of
this subsection, the income gap credit shall be allowed:
1. If modified gross income is above one hundred percent (100%) but less
than or equal to one hundred four percent (104%) of the threshold
amount, the credit shall be in an amount equal to:
a. Eleven dollars ($11) for a family size of one (1);
b. Seven dollars ($7) for a family size of two (2); and
c. Three dollars ($3) for a family size of three (3);
2. If modified gross income is above one hundred four percent (104%) but
less than or equal to one hundred eight percent (108%) of the threshold
amount, the credit shall be in an amount equal to:
a. Twenty dollars ($20) for a family size of one (1);
b. Thirteen dollars ($13) for a family size of two (2); and
c. Six dollars ($6) for a family size of three (3);
3. If modified gross income is above one hundred eight percent (108%) but
less than or equal to one hundred twelve percent (112%) of the threshold
amount, the credit shall be in an amount equal to:
a. Twenty-nine dollars ($29) for a family size of one (1);
b. Eighteen dollars ($18) for a family size of two (2); and
c. Six dollars ($6) for a family size of three (3);
4. If modified gross income is above one hundred twelve percent (112%)
but less than or equal to one hundred sixteen percent (116%) of the
threshold amount, the credit shall be in an amount equal to:
a. Thirty-seven dollars ($37) for a family size of one (1);
b. Twenty-two dollars ($22) for a family size of two (2); and
c. Six dollars ($6) for a family size of three (3);
5. If modified gross income is above one hundred sixteen percent (116%)
but les s than or equal to one hundred twenty percent (120%) of the
threshold amount, the credit shall be in an amount equal to:
a. Forty-five dollars ($45) for a family size of one (1);
b. Twenty-four dollars ($24) for a family size of two (2); and
c. Four dollars ($4) for a family size of three (3);
6. If modified gross income is above one hundred twenty percent (120%)
but less than or equal to one hundred twenty -four percent (124%) of the
threshold amount, the credit shall be in an amount equal to:
a. Fifty-one dollars ($51) for a family size of one (1); and
b. Twenty-six dollars ($26) for a family size of two (2);
7. If modified gross income is above one hundred twenty -four percent
(124%) but less than or equal to one hundred twenty -seven percent
(127%) of the t hreshold amount, the credit shall be in an amount equal
to:
a. Fifty-eight dollars ($58) for a family size of one (1); and
b. Twenty-seven dollars ($27) for a family size of two (2);
8. If modified gross income is above one hundred twenty -seven percent
(127%) but less than or equal to one hundred thirty percent (130%) of
the threshold amount, the credit shall be in an amount equal to:
a. Sixty-four dollars ($64) for a family size of one (1); and
b. Twenty-eight dollars ($28) for a family size of two (2); and
9. If modified gross income is above one hundred thirty percent (130%) but
less than or equal to one hundred thirty -three percent (133%) of the
threshold amount, the credit shall be in an amount equal to:
a. Sixty-nine dollars ($69) for a family size of one (1); and
b. Twenty-eight dollars ($28) for a family size of two (2).
(4) For a qualifying married couple filing jointly, the family size tax credit shall be
computed on the basis of their joint modified gross income and shall be applied
against their joint tax liability. For a qualifying married couple living together,
whether filing separate returns or filing separately on a combined return, the family
size tax credit shall be computed on the b asis of their combined modified gross
income, except that a separately computed modified gross income of less than zero
shall be treated as zero, and shall be applied against their combined tax liability.