Courtesy of Kentucky Lantern
A bill to reduce Kentucky’s income tax emerged Friday from a Senate committee, along with a caution from the budget committee chair to his fellow Republicans.
Criticizing “those who would throw caution to the wind,” Senate budget committee Chair Chris McDaniel said the Republican-controlled legislature should stick to the “very disciplined” process it has adopted for gradually reducing and ultimately eliminating Kentucky’s individual income tax.
Some Republicans want to speed up their march to eliminating the income tax; a Republican amendment to do that was ruled out of order in the House on Thursday.
McDaniel, of Ryland Heights, said, “I would encourage those sitting around this table that when those stunts are pulled, because they have been in the past and they will be in the future, encourage people to come forward with the spending cuts that are requisite to accomplish that policy,” McDaniel said. “Otherwise, we will be no better than other states who have seen their efforts at serious reform resoundingly defeated by the electorate they are choosing to help.”
The Senate Appropriations and Revenue Committee unanimously approved House Bill 1, which would reduce the individual income tax rate from 4% to 3.5% effective Jan. 1, 2026.
The bill, which emerged from the House Thursday with bipartisan support, was also given its second reading on the Senate floor Friday, meaning it could be passed by the full Senate and sent to Democratic Gov. Andy Beshear’s desk for approval when the legislature reconvenes Feb. 4.
When the House passed HB 1 on Thursday, Rep. Steven Doan, R-Erlanger, unsuccessfully tried to propose a floor amendment that would more swiftly cut the income tax rate in future years. His amendment was ruled out of order by House Speaker David Osborne because it would violate the state Constitution by creating an unbalanced state budget.
Doan told the Lantern he’s filed bills in past legislative sessions to eliminate what he sees as duplicative government agencies and “force the administrative state to find efficiencies.”
“I’d be happy to sit down and have a conversation about what we can cut. I’ve just not been asked.” Doan said. “The entire Republican supermajority was built on campaigning for 0% income tax. It would be disingenuous to not deliver on those promises that we have made to our constituency.”
The Republican-controlled legislature in 2022 enacted a law that reduced the individual income tax rate by a half percentage point from 5% and established budgetary thresholds that the state would have to meet in order to make further half-percent cuts. The thresholds are meant to ensure the state can absorb the reduction in revenue with drastic cuts to services. In 2023, the rate was cut to the current 4%. Republican leaders have expressed confidence the process will achieve the larger GOP goal of eventually eliminating the income tax, despite changing economic conditions facing the state.
