FRANKFORT, Ky. (WKRC) – The Kentucky General Assembly is officially back in session, with the House moving quickly on a key priority: lowering the state's income tax rate.
The House of Representatives on Thursday passed a bill with near-unanimous support that would lower the income tax rate to 3.5% in 2026. Since Republicans took control of Congress, they have lowered the tax rate from 6% in 2017 to the current 4%.
Senate Finance Committee Chairman Chris McDaniel, a Republican, highlighted the party's commitment to this goal, saying:
“Our vision is that Kentucky families know best how to spend their money. As a result of their hard work, the state's budget has increased dramatically over the past decade. And I We are working hard to help them reinvest more of their money. “
He also reiterated that Republicans eventually want to eliminate the income tax completely, but that they will take a slower approach than Ohio lawmakers, who could move ahead in 2025. But the proposed tax cuts raise concerns about Kentucky's long-term fiscal health.
Jason Bailey of the nonpartisan Kentucky Economic Policy Center testified against the measure, saying it could create a $700 million state budget deficit and jeopardize education funding, especially in poor, rural counties. he warned.
“So even if the state continues down this path of eliminating the income tax, locals don't have the resources to make up for that lost revenue. “You're going to create more inequality,” Bailey said, “and create more affluent communities.”
Gov. Andy Beshear has expressed support for the latest rate cut, but remains cautious about the potential impact of future rate cuts on state services. Despite these concerns, Beshear advocates for significant pay raises for public school teachers and universal preschool, even though proposed tax cuts could threaten funding for these efforts. Continuing.
“My hope is that we can all focus on public education, and I think the next step, of course, is to get higher salaries for educators, because we can't compete with surrounding states. “But universal pre-school coverage is also very important. “That's the biggest thing we can do to increase our workforce,” Beshear said in a December interview with Local 12. .
Kentucky's General Assembly adjourned Friday and will reconvene on Feb. 4, with the session scheduled to continue into late March. Republicans hold supermajorities in both chambers and can override Governor Beshear's veto.
