FRANKFORT, Ky. — The members of the Kentucky House of Representatives delivered on their commitment to making Kentucky more competitive by passing legislation that lowers the state’s individual income tax to 4% as of January 2024. The measure, HB 1, is sponsored by Representative Brandon Reed of Hodgenville and comes just days after the tax was lowered to 4.5% on January 1.
“With the passage of HB 1, we’re becoming a more competitive state and fulfilling our promise to make this an even better place to live, work, and raise a family,” said Reed, who serves as Vice Chair of the House Appropriations and Revenue Committee. “We’re hearing from Kentuckians across the commonwealth about how this year’s cut to 4.5% is going to help their families as they face rising costs everywhere else.”
HB 1 is the next step in the General Assembly’s efforts to eliminate the individual income tax entirely. In 2018, the General Assembly first decreased the individual income tax rate from 6% to 5%, which resulted in historic economic growth, record job creation, and state revenue. Lawmakers passed legislation (HB 8) last session that lays 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 income tax cuts allow individual Kentuckians to decide how to spend and invest their hard-earned money in their families and local communities, rather than state government collecting it before a paycheck is issued and then doling out money and favors from Frankfort,” added Appropriations and Revenue Chair Jason Petrie, who also sponsored HB 8 in the 2022 Regular Session.
According to economists, this year’s tax cut is expected to leave approximately $625 million in the pockets of Kentucky taxpayers. Early estimates for the 2024 cut are not yet available but promise to provide additional relief for taxpayers.
Reed added, “These tax cuts result from 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. The bottom line is that they belong to the working men and women of this state and we owe them to spend only what we need to and return the rest to them by reducing their tax burden.”
HB 1 now goes to the Kentucky Senate for that chamber’s consideration when lawmakers return for the second part of the 2023 Regular Session. For more information, visit legislature.ky.gov.
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