Kentucky’s House Bill 518, which would require every local government in the state to accept electronic tax filings and payments for payroll and business license taxes, has advanced through the Senate State & Local Government Committee. NFIB thanked the committee and urged the full Senate to pass the bill.
The bill, sponsored by Rep. Patrick Flannery (R-Carter), already passed the Kentucky House and was referred to the Senate committee on March 16, 2026. It now awaits a vote by the full Senate.
What the Bill Would Do
HB 518 would direct the Kentucky Secretary of State to form a 12-member advisory committee that develops standard fillable PDF forms for net profits, gross receipts, and payroll occupational tax returns. All local tax districts would then be required to adopt those forms as their electronic filing option and accept electronic or ACH payments.
Local governments could charge a $2 electronic processing fee plus any additional surcharge tied to accepting electronic payments, according to the Kentucky Association of Counties. Tax districts that already had online systems in place before January 1, 2025 may opt out by adopting a written order.
For small businesses that operate across multiple Kentucky cities and counties, the current patchwork of paper forms and payment methods is a real headache. Each jurisdiction can have its own forms and filing rules. This bill aims to simplify that by creating one electronic standard statewide.
An NFIB survey found that over 55% of Kentucky small business members support requiring electronic local tax filings, with fewer than 28% opposed.
The full compliance deadline in the bill is January 1, 2028, though some versions of the bill reference a July 1, 2029 timeline for certain requirements. The Kentucky General Assembly is scheduled to continue working through late March before a veto recess starting April 2, with the session’s final days set for April 14 and 15.
Small business owners in Kentucky should track HB 518’s progress through the full Senate. If it passes and is signed into law, it would not require immediate action, but it would signal a shift toward standardized electronic filing that businesses should prepare for over the next few years.
