Can I add Libs and Reports folders from the project to the .gitignore file? I have massive ammount of those files and Im not sure if they are necessary, can ignoring those directories cause any issues?
Yes. You should.
And you should include the following in the .gitignore as well.
bin/
Libs/
Report/
.cache/
I also include this:
Drivers/
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It is likely that you have already added and committed Libs and Report into the repository.
Then you should remove them out of the index. You want to do
$ cd <projectDir>
$ git rm -r --cached Libs
$ git rm -r --cached Reports
Have a read
https://alvinalexander.com/git/git-rm-file-git-repository-dont-track-accidentally-added/
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Thanks, worked just how I wanted
Also what about those files? Should I ignore them as well?
.project
.classpath
I see those files update each time I open the project, is it necessary to keep them in git?
By default, .gitignore contains these files and patterns:
/bin /Libs .settings .classpath /.svn
well, this description is not describing what KS actually does. documentation fault.
Using Katalon Studio 8.2.5, when you create a new project, you can instruct KS to create .gitignore file with default content.
The file includes the following lines:
.gradle
bin
Reports
Libs
output
!output/.gitkeep
build
.classpath
.project
This is the official .gitignore file Katalon team suggests. You can start with it and modify as you think appropriate for you.
The offical .gitignore misses a line:
/.cache/
but you should include it. See .gitignore file should include .cache/
Don’t forget this, please.
I ended up with those in gitignore file, works good so far 
bin/
Libs/
Reports/
.cache
Drivers/
.classpath
.project
# Ignore Gradle project-specific cache directory
.gradle
# Ignore Gradle build output directory
build