Kentucky lawmakers completed their work Tuesday to reduce the state’s individual income tax rate, delivering on a top Republican priority just five days into this year’s session.
Final passage came on a 34-3 Senate vote to lower the tax to 3.5% from 4% at the start of 2026. The bill goes to Democratic Governor Andy Beshear, who has said he supports the tax cut. It continues a downward trend in the personal income tax since the GOP gained full control of the legislature in 2017.
Supporters say the lower tax rate will promote long-term economic growth and population gains in Kentucky by enabling people to keep more of the money they earn.
Supporters said the latest income tax cut is expected to save taxpayers another $718 million annually.
Since the passage of a tax overhaul in 2022, the individual income tax in Kentucky has gradually been reduced by increments of a half-percentage point, conditioned on meeting benchmarks to ensure revenues are sufficient to meet state spending needs.
As part of that tax overhaul, the state sales tax was extended to apply to more services. Critics say lower-income families were hurt the most by putting sales tax on more services.
Source: WDRB
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