During the 2022 session, the General Assembly took action to begin gradually lowering Kentucky’s individual income tax. The legislation included goals the state must meet in order to reduce the tax by 0.5% each year.
On Wednesday, the Kentucky Department of Revenue confirmed a surplus in the budget that meets those conditions.
With this news, Kentuckians will see the individual income tax go from 5% to 4.5% starting January 1, 2023.
Through House Bill 8, this process will repeat itself until Kentucky’s individual income tax is fully phased out.
Kentucky Chamber President and CEO Ashli Watts released the following statement in reaction to the news:
“Lowering the individual income tax is an important driver of growth and leaves more money in Kentuckians paychecks. The Kentucky Chamber strongly supported House Bill 8 to ensure Kentucky becomes more competitive and applauds this first decrease in the tax. As our surrounding states continue to take steps to reform their tax code to attract individuals and businesses, Kentucky must continue to focus on making continued progress in achieving a more consumption-based tax system.”