Republicans and some Dems in House charge forward to pass income tax cut
In a truly bipartisan effort, it’s looking like Kentucky’s income tax rate is being slashed from 4% to 3.5% by New Year’s Day 2026.
At 90-7, support in the Kentucky House for cutting the income tax rate Thursday was nearly unanimous. That was the final tally on the vote board Thursday when the GOP-led House passed House Bill 1 onto the Senate.
All Republicans present to vote were in complete lockstep on the matter.
They have long held that the tax cuts that began in 2022, when Kentucky had a 5% income tax rate, will help juice the economy, provide relief to families crunched by inflation and attract more residents to the state.
House Appropriations & Revenue Chair Jason Petrie, R-Elkton, has led the charge on this since passing House Bill 8, which set the state on a path to get to zero income tax cut provided it meets certain revenue and savings thresholds.
The issue has often toed a partisan line, with Democrats voting against it because it decreases the state’s revenue to pay for such existing programs as Medicaid and new proposals like universal pre-K.
But this time, the bill to cut taxes also garnered crossover support from a slight majority of Democrats. But not without some hand-wringing and soul searching
Rep. Chad Aull was a case in point. He wrestled with the opportunity cost of the tax cut, which is projected to reduce yearly state revenue by more than $700 million.
“There are a litany of other policy decisions that this body could undertake that could make an immediate, financially significant impact on the working-class families of Kentucky, if we had the courage to move forward: a child tax credit, raising the minimum wage to an actual livable wage or universal preschool,” said Aull, a Lexington Democrat.
Still, he said that the money saved for the average Kentuckian was worth a yes vote.
“Today, I’m faced with a binary choice — yes or no, are you for it or against it — and I’ve got to make a decision. It’s not what I wish I had the choice to do, but today, I’m choosing to be curious and I’m choosing to be open.”
Democratic Gov. Andy Beshear has signaled that he will sign the tax cut.
Other Democrats bemoaned the fact that the across-the-board tax cut benefits wealthy Kentuckians much more than low-income, middle-income or retired Kentuckians.
Someone making $1 million a year will, if the cut goes into effect, be saving $15,000 each year compared to how they were being taxed three years ago.
By contrast, a Kentuckian making $50,000 in annual income will be saving $750 each year.
Rep. Tina Bojanowski was one of seven Democrats to vote no. The Louisville Democrat said the cost of the cut could have easily covered a 10% pay increase for all Kentucky teachers at about $460 million.
The rhetoric wasn’t all on the Democratic side, however.
House Majority Whip Jason Nemes went on offense. He boasted about Republicans’ emphasis on fiscal responsibility since taking complete control of the state’s purse strings when they flipped the House in 2016.
He also hinted there could be political ramifications for Democrats voting “no.”
“f you vote no, you are voting to raise taxes on Kentuckians $700 million and your voters will know about it,” the Middletown Republican said.
There was also some minor bickering on the floor among Republicans about the pace to cut.
Rep. Steven Doan. R-Erlanger, introduced an amendment to cut taxes deeper and faster. He suggested a full percentage point each year with no required “triggers.”
“It would place us in a severe budget deficit,” Petrie said on the floor.
The amendment was ruled out of order by House Speaker David Osborne, R-Prospect.
House Bill 1 is expected to pass next month when the Senate will have had enough legislative days to give it final passage. It then will move to Beshear to sign.
