By MICHAEL CRIMMINS
Glasgow News 1
Barren Countians are unlikely to see another cut to Kentucky’s income tax rate as one of the two “triggers” set up allowing state legislators to consider a half-point decrease was not met during the 2024-25 fiscal year.
In 2022, the General Assembly created a law setting up the process to incrementally lower the state’s income tax rate with the eventual goal to do away with it all together. The 2022 bill was Kentucky House Bill 8, which was vetoed by Governor Andy Beshear because, in addition to setting up the process of phasing out individual income taxes, it added taxes to previously exempt services.
Lawmakers can consider a half-point reduction in the income tax rate if the “rainy day” fund balance is at least 10 percent of what total General Fund receipts were in the fiscal year just ended and if revenue in the prior fiscal year would have exceeded General Fund spending even if the income tax rate had been one full percentage point lower, according to the Kentucky Lantern.
The revenue missed the mark, according to the director of the office of state budget. State Senator Chris McDaniel (R) said the legislature “missed hitting that second trigger by about $7.5 million,” which, he said, is “a very small amount in the context of annual revenues of about $15 billion.”
In 2022 the legislature cut the income tax rate from 5 percent to 4.5 percent. The 2023 General Assembly cut the rate to 4 percent, and the 2025 General Assembly cut the rate to 3.5 percent effective Jan. 1, 2026.
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