Frankfort, Kentucky (February 8, 2023) – Kentuckians are one step closer to seeing the state’s individual income tax eliminated entirely after members of the Senate approved HB 1 by a vote of 30-5. The measure would lower the state’s individual income tax to 4% as of January 2024. The measure, HB 1, is sponsored by Representative Brandon Reed of Hodgenville, Vice Chair of the House Appropriations and Revenue Committee, and comes just days after the tax was lowered to 4.5% on January 1. Senate Budget Chair Chris McDaniel carried the bill in the Senate.
“I am excited to see another income tax reduction measure reach the Governor’s desk,” McDaniel said, “The onus is now on Governor Andy Beshear to show if he does, or does not, stand with working Kentucky taxpayers. No matter his position, the Kentucky General Assembly stands ready to override his gubernatorial veto.”
Reed added, “This is a historic moment for working Kentuckians. The tax cut that took place on January 1 is expected to leave an estimated $625 million in their paychecks and pocketbooks this year alone. As many Kentuckians face a rising cost of living, these dollars will make a real difference in their lives. Following that up with another cut next year sends a clear message that not only is our plan working, but we are also keeping our commitment to let the people of Kentucky – not the government – spend their own hard-earned money.”
HB 1 is the next step in the Kentucky General Assembly’s efforts to eliminate the individual income tax entirely. In 2018, the General Assembly decreased the individual income tax rate from 6% to 5%, which resulted in historic economic growth, as well as record job creation and state revenue. During the 2022 Regular Session, lawmakers passed HB 8, which laid the groundwork to eliminate the individual income tax entirely but includes preset triggers that must be met before the legislature can move to decrease the tax in half a percentage point increments. These triggers essentially hold funding for state programs and agencies harmless.
“These tax cuts are the result of responsible budgeting and a commitment to the philosophy that these are taxpayer dollars to begin with and state government is merely the trustee of those resources,” added Appropriations and Revenue Chair Jason Petrie, who also sponsored HB 8 in the 2022 Regular Session. “They also represent an end to the practice of penalizing productivity and will make our state more competitive for not only jobs, but individuals who are ready and willing to join our workforce.”
Reed added, “I am pleased to see the bill pass both the House and Senate by wide margins and hope the Governor will sign this measure. If not, we’ve certainly shown that we’re willing to override a veto when it is in the best interests of Kentuckians.”