WPBN: The state’s individual income tax rate was lowered on Thursday by a 90-7 vote in the Kentucky House.
Three days into the 30-day legislative session this year, Republicans made progress on House Bill 1, delivering on a primary priority. The tax would drop from 4% at the start of 2026 to 3.5% under the law.
Kentucky’s individual income tax has been progressively lowered by half a percentage point since Republican lawmakers passed a tax overhaul in 2022. This reduction is contingent on reaching criteria that guarantee revenues are adequate to cover state expenditure requirements. Eliminating Kentucky’s income tax is the ultimate objective.
House Bill 1 proponents claim that by allowing people to keep more of their earnings, the lower tax rate will encourage long-term economic growth and population expansion in the Bluegrass State.
When promoting the bill, Republican Representative Jason Nemes declared, “We will not tax our way to prosperity.”
Nemes informed lawmakers that Kentucky families have benefited greatly from the income tax cut from 6% to 4.5%.
“You – if you voted for these things – have reduced taxes on the average Kentucky household by $1,549.50,” Nemes stated. “$1,549.50 on the average Kentucky household. That’s a lot of food. That’s a lot of clothing.”
Concerned by the bill, some House Democrats said they were unsure of what to do. They expressed worries that during a recession, the decreased money might endanger vital services. Nonetheless, a few of them supported the bill, claiming to have done so in order to provide some tax relief to Kentuckians.
“This cut roughly would equal about $12 a paycheck for an average household Kentucky income of about $61,000. $12 a paycheck may seem like a lot to a lot of people in this chamber, but it can mean a whole lot to that family who is struggling to buy groceries, make payments,” Rep. Chad Aull stated.
“We’re in pretty good shape to do this, so we should do it,” Democratic Rep. Al Gentry stated on Thursday. “If we do run into some recessionary challenges in the years ahead, I hope and I pray that we have the courage to make tough decisions without cutting much-needed services to people in need.”
Despite the fact that the individual income tax rate would be reduced in 2026, Republican Representative Jason Petrie, who serves as the chairman of the House Appropriations and Revenue Committee, has provided assurances that there is a “tremendous amount of room to keep the budget balanced.”
A state budget for the next two years was approved by lawmakers in the previous year.
During the process of overhauling the tax system that took place three years ago, the state sales tax was expanded to include a greater number of services.
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In spite of the fact that wealthy Kentuckians reap a disproportionate benefit from a lower income tax, critics argue that the families with lesser incomes are the ones who suffer the most as a result of the increased sales tax on a greater number of services.
“When I talk to my neighbors, they often feel that it’s a wash. They don’t feel like there’s any more money in their pocket and in fact, there’s not,” Rep. Rachel Roarx stated. “They end up spending it on increased services for the increased sales taxes on over 70+ services that they now pay 6% tax on.”
The bill will now be sent to the Senate, which is dominated by the Republican Party and has significant support for it. Andy Beshear, the Democratic governor of Kentucky, has also indicated that he is in favor of the tax cut.
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