HB195 creates a new Kentucky income tax incentive aimed at helping first-time home buyers save for a principal residence. For taxable years beginning in 2026 and ending before 2036, eligible taxpayers may deduct contributions made to a designated eligible savings account and exclude interest earned on that account, subject to annual caps of $5,000 for single filers and $10,000 for joint filers or married individuals filing separately on a combined form. The total benefit is also capped over the life of the program at $25,000 for single account holders and $50,000 for joint account holders.
The bill defines key terms such as first-time home buyer, eligible savings account, eligible costs, and qualified principal residence. It also establishes recapture rules if funds are withdrawn for nonqualified purposes, while allowing exceptions for death, disability, exhaustion of unemployment benefits after job loss, bankruptcy, or transfer to another eligible account within 60 days. The Department of Revenue may request bank records or other verification to confirm contributions, interest, and qualified withdrawals.
HB195 also amends Kentucky tax law to conform the state adjusted gross income calculation to these new savings-account deductions and interest exclusions. In addition, it requires the Department of Revenue to report detailed, nonconfidential data to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue beginning in 2027, including county-level usage and income-range breakdowns, so lawmakers can evaluate the program’s effectiveness. The bill further updates Kentucky’s tax confidentiality statute to allow disclosure of information needed to administer and study this new incentive.
The bill’s impact would be to create a new state tax-favored savings vehicle for prospective homebuyers and to reduce taxable income for qualifying contributions and interest earned. It would affect individual taxpayers, financial institutions with physical locations in Kentucky, and the Department of Revenue, while also adding a new reporting obligation for state tax administrators. Because the program is time-limited and capped, its fiscal effect would depend on participation levels and the amount of savings accumulated by eligible taxpayers.
No committee transcript or vote history was provided, so there is no recorded legislative sentiment or identified floor/committee controversy in the supplied materials. Based on the bill text alone, the measure appears policy-driven and targeted toward housing affordability and homeownership assistance, with the main implementation issues likely involving eligibility verification, recapture enforcement, and the revenue cost of the tax preference.
HB195 would add a new section to KRS Chapter 141 creating a first-time home buyer savings account deduction and interest exclusion, and it would amend KRS 141.019 to incorporate those amounts into Kentucky’s adjusted gross income rules. It also amends KRS 131.190 to permit the Department of Revenue to share otherwise confidential tax information with the Legislative Research Commission for program oversight and evaluation. The bill would affect individual taxpayers seeking to buy a first home, financial institutions offering the designated accounts, and the Department of Revenue’s administration and reporting duties.
No committee discussion or voting record was provided, so there is no direct evidence of support, opposition, or amendments from legislative debate. From the bill’s structure and caption, the measure appears generally favorable toward encouraging homeownership and savings, with a policy emphasis on tax relief for first-time buyers. Any sentiment assessment beyond that would be speculative based on the text alone.
The bill text suggests the most likely points of contention are fiscal cost, eligibility rules, and administrative oversight. Potential concerns include whether the deduction and interest exclusion would reduce state revenue, whether the ten-year prior ownership test is the right definition of a first-time buyer, and how strictly the Department of Revenue should verify qualified deposits and withdrawals. Another possible issue is the breadth of the reporting and disclosure provisions, since the bill makes certain taxpayer data available for legislative evaluation rather than keeping it fully confidential.