Kentucky to reduce individual income tax rate from 4% to 3.5% in January 2026, contingent on budget triggers.

Kentucky is set to reduce its individual income tax rate from 4% to 3.5% starting January 2026, after meeting financial triggers in the state budget. Lawmakers will have the opportunity to pass this rate cut when they reconvene next year, reflecting the belief that Kentuckians can spend their money more efficiently than the government. The tax cut law, passed in 2022, requires the state budget reserve trust fund to be at least 10% of General Fund revenue at the end of a fiscal year, and for revenue to have exceeded General Fund spending even with a one percentage point lower tax rate.

August 21, 2024
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