AN ACT relating to a tax deduction for theft losses.

HB 167 allows Kentucky taxpayers to deduct theft losses on their state income tax returns, aligning with the federal Internal Revenue Code's Section 165(e). This provision directly affects individuals who experienced property theft, enabling them to reduce their taxable income by the amount of the loss. The bill amends Kentucky law to explicitly permit this deduction, which was previously excluded under state tax rules. It does not create new eligibility criteria but adopts the federal standard for theft loss deductions. This change applies to all individual taxpayers (not corporations) who qualify under federal guidelines.