The Kentucky CPA Journal


2024 Legislative Review

Issue 2
May 31, 2024

By P. Anthony Allen

On Monday, April 15, the Kentucky General Assembly adjourned sine die, ending the 2024 60-day Legislative Session. With the passage of the Commonwealth’s two-year budget serving as the legislature’s top priority, tax policy updates, CPA educational modifications, and business legislation were enacted into law.     

Following Governor Andy Beshear’s re-election to a second term in November, an initial Executive Branch budget proposal was revealed in late December. Although the Governor can provide recommendations for funding the Executive Branch, the General Assembly has sole power over the state’s appropriations process. Kentucky operates on a two-year, biennial budget for all parts of its government. The 60-day Sessions are designed specifically to address the biennial budget and revenue matters.

With Republican supermajorities in both Chambers of the General Assembly, the Governor and the Legislative Branch took competing positions regarding the state’s biennial budget proposals this Session. Although the Governor line-item vetoed the major budget bills, the Republican majorities ultimately passed their priorities into law. These opposing positions remained evident throughout the Session on a party-line basis regarding varying policy issues. 

During this 60-day Session, KyCPA’s advocacy team met directly with key policymakers and collaborated with business stakeholders to ensure your interests were represented in Frankfort. With over 1,200 bills reviewed, monitored, and directly impacted this Session, this article will review the Society and business community’s priority issues during the 2024 Legislative Session. 

CPA Day 2024

KyCPA members in the Kentucky Senate Chambers, CPA Day at the Capitol January 31, 2024.

Budget overview

Following historic state revenue levels and the influx of federal funds to state and local governments during the COVID-19 pandemic, the Governor and members of the General Assembly prepared for a robust debate on the next biennial budget. During Governor Beshear’s annual State of the Commonwealth address in early January, he highlighted the Administration’s top priorities building upon the achievements of his first term in office. In contrast to the Governor’s $136 billion proposal, the General Assembly passed House Bill 6 containing $128 billion in total restricted, general, and federal funding for the Executive Branch in fiscal years 2025 and 2026. A few key highlights from the Executive Branch budget include:

  • Significant increases in public school funding through the Support for Education Excellence in Kentucky (SEEK) formula, increasing the amount per pupil to $4,326 in fiscal year 2025 and $4,586 in fiscal year 2026.
  • Increases funding for school safety by allocating more than $34 million toward a school resource officer (SRO) reimbursement program.
  • Fully funds all the state pension plans.
  • Gives state employees a 3 percent pay increase in each year of the biennium.
  • Allocates an increase of $548.1 million increase toward Medicaid benefits.
  • Allocates millions toward clean water and broadband infrastructure initiatives.

Unique compared to past biennial budget proposals, the House of Representatives introduced House Bill 1. This legislation authorizes appropriations from the Budget Reserve Trust Fund or “Rainy Day Fund” into key infrastructure investments, state pension plans, water and wastewater, and community specific project initiatives. House Bill 1 provides approximately $2.7 billion in one-time appropriations designed specifically to utilize some of the state’s multi-billion-dollar budget reserve for key investments in the Commonwealth.

 In addition to House Bills 1 and 6, House Bill 263 provides appropriations to the General Assembly, House Bill 264 to the Judicial Branch, House Bill 265 to the Transportation Cabinet, and House Bill 266 to the Commonwealth’s two-year road plan. All budget bills were initially passed by the General Assembly however, House Bills 1, 6, 263, and 265 each received line-item vetoes from the Governor. Per the Kentucky Constitution, the Governor has the power to line-item veto bills that contain appropriations. On April 12 and 15, other than one sustained line-item veto in the Executive Budget, the General Assembly implemented the final passage of their budget proposals to be signed by Secretary of State, Michael Adams.

Donate to the KyCPA-PAC

In honor of KyCPA’s 100-year anniversary, consider contributing $100 or more to KyCPA-PAC in 2024. Your commitment will continue to strengthen our impact in Frankfort. Thank you for advancing the accounting profession in Kentucky!

Click here to learn more about KyCPA-PAC.
Download the KyCPA Advocacy in Action flyer.

Policy priorities

With Kentucky’s biennial budget proposals serving as the primary focus of the Session, the General Assembly also passed revenue and tax policy modifications. Following significant tax reforms in the aftermath of COVID-19, policymakers aimed to keep amendments to Kentucky’s tax code limited this year. A bi-partisan majority of the General Assembly voted to pass a final revenue package via House Bill 8 however, the Governor delivered two line-item vetoes on April 9 to the General Assembly. When returned to the Kentucky House, the line-item vetoes were ruled invalid, and the bill was delivered to the Secretary of State for enrollment into law. The House determined House Bill 8 is not an appropriations bill. Therefore, all provisions of House Bill 8 will become law.

With policymakers considering targeted tax updates this Session, KyCPA was able to include specific recommendations. Section 14 of the bill updates Kentucky’s conformity with the U.S. Internal Revenue Code (IRC) as of January 1, 2024. The update retains the IRC Section 168(k) and 179 exemptions, with this being the third consecutive year the General Assembly has adopted the conforming policy. Prior to the 2022 Legislative Session, Kentucky’s U.S. IRC conformity had been inconsistently updated, sometimes with multi-year gaps in between. This update will continue to simplify Kentucky’s implementation of its tax policy by using federal taxable income as a starting point for calculations and benefit business and individual filers in the Commonwealth.

Sections 22 through 27 define “administrative writings” and requiring the Kentucky Department of Revenue publish administrative writings within 120 days of their issuance or finalization. This legislation provides additional transparency and better availability to the Department’s tax policy guidance for taxpayers and tax preparers. The Society supported this initiative as part of enhancing Kentucky’s taxpayer rights. These Sections were the original content of House Bill 122.

Sections 43 through 47 revive the Kentucky tax amnesty program initially enacted during the 2022 Legislative Session. This provision requires the Department secure a third-party facilitator for the amnesty program to be conducted during a 60-day period in 2024 or 2025. This provision was one of the line-item vetoes delivered by the Governor, mainly due to staffing and funding concerns. Due to a failure to implement the program in 2022 and 2023, it remains uncertain whether the program will materialize moving forward.

Sections 33 and 34 exempt currency and bullion from Kentucky’s sales and use tax. This exemption was originally included in HB101, SB105, and SB121. These sections were one of the Governor’s line-item vetoes that were ultimately overridden by the General Assembly.

Notably absent from the legislation are any new services subject to Kentucky’s sales tax. KyCPA promotes the avoidance of further expanding Kentucky’s sales tax base to business-to-business services, especially professional services. In addition, there were no retroactive tax provisions enacted during the Session. This further demonstrates the importance of KyCPA’s guiding principles of sound tax policy including clear administrative guidance, certainty, and predictability.

With historic investments made by the General Assembly this Session, careful consideration was taken to trigger an individual income tax rate reduction of 0.5 percent by 2026. Section 15 exempts funds appropriated from the Budget Reserve Trust Fund account from the definition of “General Fund appropriations.” As a reminder, the individual income tax rate reduction provisions outlined in the 2022 Legislative Session referenced General Fund appropriations when calculating whether the state Treasury meets the individual income tax rate reduction requirements. Therefore, the approximate $2.7 billion appropriated from the Budget Reserve Trust Fund via House Bill 1 will not impact the reduction formula. If the rate reduction triggers are met when fiscal year 2024 concludes, the General Assembly will have the opportunity to vote on a 0.5 percent reduction during the 2025 Legislative Session and reduce Kentucky’s rate to 3.5 percent effective January 1, 2026.

As the reduction in the individual income tax rate continues and revenue sources narrow in scope, alternative tax measures will be considered by the General Assembly in future Sessions to maintain current state funding levels. Expanding the sales tax base to business-to-business transactions and professional services will become a heightened issue. Remaining on top of these issues and in communication with policymakers will be vital to avoiding further complication of Kentucky’s tax code.

To review a section-by-section breakdown of House Bill 8, please visit KyCPA’s tax reform webpage for more information.

Accounting pipeline

As the number of CPA candidates continues to decline and with retirements on the rise, the Society continues to evaluate best strategies in addressing the growing talent shortage in the Commonwealth. As part of this effort, KyCPA worked in collaboration with the Kentucky State Board of Accountancy to achieve two key regulatory amendments this Session.

When a CPA candidate begins the CPA examination and the first passing scores are released, the candidate is provided 18 months to complete all four sections of the test. Although the 18-month timeframe was originally designed to provide for additional flexibility and expedited completion, it poses a difficult burden for many, especially non-traditional candidates that are preparing for the exam and working simultaneously. Employers are also struggling to recruit and retain staff, thereby pressuring CPA candidates with less time to study, prepare, and take the CPA exam. To address these concerns, the Society in collaboration with the Kentucky State Board of Accountancy, advocated for specific amendments to 201 KAR 001:190, which will permanently extend the CPA exam timeline from 18 to 30 months. This comes after hearing from students, educators, and practitioners alike that an increased CPA exam window is essential to retaining more CPA candidates in the profession’s pipeline.

During that same regulatory hearing on February 12, the amendments eliminated the cap on the amount of internship hours that can satisfy the 150 credit hour requirement outlined by KRS 325.261(5). Kentucky currently has a six-hour maximum for internship hours that count towards a CPA candidate’s 150 credit hours. With this amendment, students can utilize direct accounting experience and internships to fulfill the credit hour requirement without a specified limit. The amount of internship hours eligible for credit hours is determined on a university basis.  

Following approval by the General Assembly’s Administrative Regulation Review Subcommittee on February 12, the changes will become effective by June 2024.

In addition to these amendments, the Society and Board of Accountancy advocated for the establishment of a Board of Accountancy scholarship fund operated by the KyCPA Educational Foundation via House Bill 275 during the 2022 Legislative Session. On March 11, the General Assembly’s Administrative Regulation Review Subcommittee approved the regulatory framework for this scholarship fund outlined in 201 KAR 001:200. This regulatory framework will be effective July 2024.

These initiatives continue to build upon the broader conversation occurring at a national level regarding a declining interest in accounting, the profession’s culture, and the 150-credit hours required for the CPA license. As state societies, state boards of accountancy, the American Institute of CPAs (AICPA), and National Association of State Boards of Accountancy (NASBA) work to address this issue, you are encouraged to provide direct feedback.

The National Pipeline Advisory Group (NPAG) consists of representatives from the aforementioned entities, accounting firms, and educators across the country. NPAG is collected data and guidance from the profession via their national survey that was included in your April e-newsletter. You are encouraged to provide feedback as KyCPA, other state societies, and stakeholders continue to assess the best path forward for the profession’s sustainability.   

KyCPA 100-Year Anniversary

Senate Resolution 256 was introduced by Senator Amanda Mays Bledsoe on March 27 recognizing June 14, 2024, as KyCPA Appreciation Day in Kentucky to commemorate the Society’s 100-year anniversary. During the final hours of the Session, the Kentucky Senate adopted SR256, providing official recognition of the resolution.

On June 14, the Society is hosting an official anniversary celebration at The Olmsted in Louisville at 6 p.m. Click here to register for this event.

Other priority legislation

With the budget and revenue bills taking the spotlight this Session, KyCPA tracked other key bills of interest to members and businesses.

A multi-year initiative to amend Kentucky’s Constitution to allow for alternative local revenue options was introduced via House Bill 14 .  A similar measure progressed through the General Assembly during the 2022 Legislative Session but fell short of passage in the Senate. As a refresher, the proposed amendment would allow local governments the ability to diversify revenue sources outside of occupational licensing fees, property, and insurance premium taxes. Proposed Constitutional amendments require the support of 3/5 of all members in each Chamber and a majority ratification by voters on the ballot in the November election. The legislation received only two readings on the House floor, falling short of passage in either Chamber of the General Assembly this Session.

KyCPA leaves the decision to implement the Constitutional amendment and authorize new local taxes to policymakers and voters of the Commonwealth. As objective tax policy professionals, the Society remains committed to strengthening local tax uniformity within this context, which decreases the taxpayers’ costs of compliance with the law, and the local districts’ costs for collecting taxes, examining returns, and resolving disputes. KyCPA will continue to ensure uniformity, centralized collection, and sound tax policy are critical to any new local taxes considered by the General Assembly. 

House Bill 34 would allow universal recognition of occupational licenses and government certifications in Kentucky. The Kentucky State Board of Accountancy implements and enforces a well-established and functioning statutory process, set forth in KRS 325.280, through which it issues reciprocal licenses to applicants who hold CPA licenses in other states or foreign countries. The elements of Kentucky’s reciprocal CPA licensing statute are patterned after the statutes in other state licensing jurisdictions. An existing process currently in place therefore already achieves the underlying purpose of this proposed legislation and shares the vast majority of core concepts and elements offered in House Bill 34. The legislation was introduced this Session but failed to advance further in the legislative process.

House Bill 124 would allow ex-offenders the ability to petition a licensing board or public employer before enrolling in required training to determine if their criminal record would be disqualifying. This would apply to all licensed professionals including candidates seeking their CPA. The legislation overwhelmingly passed the House but failed to make progress in the Senate.

House Bill 492 requires that each employee of a “qualified local government,” primarily Lexington-Fayette Urban County Government and Louisville Metro, who has access to federal tax information submit to a criminal background check by Kentucky and the U.S. FBI. This legislation was passed by both Chambers of the General Assembly and signed by the Governor into law on April 4, 2024.

House Bill 771 permits and establishes new statutory rules and guidance for spendthrift trusts. A “spendthrift trust adviser” means any person, including but not limited to an accountant, attorney, or investment adviser, who gives advice concerning or was involved in the creation of, transfer of property to, or administration of a spendthrift trust or who participated in the preparation of accountings, tax returns, or other reports related to the trust. This legislation overwhelmingly passed both Chambers of the General Assembly but was vetoed by the Governor on April 9. The Governor’s veto was sustained by the General Assembly, as the bill failed to receive an override vote.

Senate Bill 139 aligns Kentucky with 45 other states by removing a requirement for high-net-worth investors who want to pool their money to have the same licensure requirements as a 401k financial advisor to oversee the investment. This legislation was passed by both Chambers of the General Assembly and signed by the Governor into law on April 4, 2024.


Leveraging the expertise of the CPA profession provides KyCPA the credibility to advise policymakers on tax, client advisory, licensing, and business policy issues. Your involvement is critical to providing key advice and protecting the profession. The Society will proactively offer its professional, expert, and practitioner guidance to the General Assembly and Governor’s Administration for the implementation of clear administrative guidance regarding law changes passed during the 2024 Legislative Session.  

Be sure to stay up to date on what's happening in Frankfort and Washington by reading the Society’s Legislative Updates and joining the discussions on Member Meetup.

If you have any questions, comments or feedback, please feel free to reach out to the Society’s Government Affairs Director, P. Anthony Allen, at