11-03-2025
Bill would change how Kentucky can lower income tax. Here's how
An amended bill moving forward in the Kentucky legislature would drastically change the state's approach to reducing its income tax.
House Bill 775, sponsored by Republican Rep. Jason Nemes, includes a provision adding new conditions that would let the state reduce its individual income tax in increments from 0.1% to 0.5%.
Under current law, the General Assembly is only authorized to decrease the tax rate by 0.5% annually if certain triggers are met, based on the state's revenue and rainy day fund balance. The Republican-controlled legislature's goal is to eventually eliminate the tax.
Last year, Republican leaders announced the state budget hit its triggers to lower the tax rate from 4% to 3.5%. Lawmakers approved House Bill 1 to implement that cut earlier this session, and Democratic Gov. Andy Beshear signed it into law.
HB 775 bill passed out of the House Appropriations & Revenue Committee on Tuesday on a 16-3-1 vote.
During the meeting, Minority Floor Leader Pamela Stevenson, D-Louisville, asked why a change was needed to the system the legislature previously put in place.
Republican Rep. Jason Petrie, chair of the committee, said as conditions and viewpoints change, programs get modified to accommodate that.
"This continues with the same policy of reduction and continues with the same policy of conditions, and it should be of some satisfaction to some that we may not hit a half a point, but we may hit something smaller so more state revenue continues to come in," Petrie said.
Meanwhile, Republican Rep. Ken Fleming said the revised approach will help the state attract workers and "put more money in people's pockets."
"We went through a methodical systematic approach to look at how we can reduce the income tax, and at the time we talked about looking at smaller increments ... but I think this is going to be a good process and good way to look at smaller increments given the market conditions, given the economic situations and giving us more flexibility to achieve our goals," Fleming said.
Reach reporter Hannah Pinski at hpinski@ or follow her on X, formerly known as Twitter, at @hannahpinski.
This article originally appeared on Louisville Courier Journal: Kentucky legislature: Bill would make changes for income tax cuts
