income tax

Kentucky has a system to cut the income tax rate annually, so long as budget triggers are met. A new bill passed out of the legislature makes hitting those triggers easier.

With little notice, Kentucky’s GOP is pushing sweeping changes to the state’s budget trigger system for annual tax cuts, as well as business tax incentives.

Democratic Gov. Andy Beshear has signed a Republican-backed measure to further reduce Kentucky’s income tax. The state's personal income tax will be lowered from 4% to 3.5% percent on Jan. 1, 2026.

The bill will lower Kentucky’s individual income tax rate from 4% to 3.5% in 2026, a move projected to lower state revenue by $718 million annually.

The bill to cut Kentucky’s individual income tax rate to 3.5% passed the House with bipartisan support and is expected to clear the Senate next month.

The bill would lower Kentucky’s individual income tax rate from 4% to 3.5% in 2026, projected to lower state revenue by $718 million annually.

State lawmakers return to Frankfort Jan. 7 for the beginning of the Kentucky General Assembly’s 2025 session. The first item on their agenda is expected to be a tax cut.

The tax cut mechanism passed in 2022 is designed to gradually lower Kentucky’s individual income tax until it is eliminated.

A projected dip in state tax collections appears not to have dimmed Republican leaders’ eagerness to again cut Kentucky’s income tax.

LEXINGTON — Republicans will quickly move to keep lowering Kentucky’s income tax when the legislature convenes in January, while changes in the local tax system would be far more challenging to achieve, legislative leaders said Monday.