Home » New report explains the ins-and-outs of law to reduce income taxes in Kentucky

New report explains the ins-and-outs of law to reduce income taxes in Kentucky

The Bottom Line: by Charles Aull

FRANKFORT, Ky. — Understanding and following through on a key state tax change recently implemented by Kentucky lawmakers is the subject of a new report from the Kentucky Chamber Center for Policy and Research.

A Guide to House Bill 8 explains the nuances of a major legislative measure to gradually reduce and phase out individual income taxes and identifies why the bill is critical to Kentucky’s economic future.

“Phasing out Kentucky’s individual income tax puts the Commonwealth on a stronger path for long-term, sustainable growth and positions us to more aggressively compete with other states for jobs, workers, and economic opportunity,” the report states. “Passage of House Bill 8 in 2022 marked the start of this process, but its success will ultimately depend on the commitment and dedication of lawmakers who serve in the General Assembly over the next decade and beyond. Current and future Kentucky policymakers should become deeply familiar with the ins and outs of this legislation and work diligently to ensure its success.”

Lawmakers passed House Bill 8 in the 2022 legislative session, creating a thoughtful, gradual process for reducing the state’s individual income tax rate while paving. It creates a process for carefully and gradually reducing the state individual income tax rate and paves the way for the Commonwealth to join just nine other states without state-level individual income taxes. The bill was the Kentucky Chamber’s top legislative priority and is central to a broader strategy to grow Kentucky’s population, increase workforce participation, and make the Commonwealth more competitive for good jobs and economic investments.

The new report provides an overview of the mechanics of House Bill 8, explains why reducing individual income taxes is important to Kentucky’s economy, and provides the next steps lawmakers can take to follow through on this key legislation.

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