UPDATED 2/6/2025: As the 2025 legislative session reconvened Tuesday, the Senate passed House Bill 1, a measure to reduce the individual income tax rate from 4% to 3.5%, by a vote of 34-3. On Thursday, Governor Andy Beshear signed the measure into law.
Senate Appropriations and Revenue Committee Chair Sen. Chris McDaniel spoke on the floor prior to the vote to share how proud he is of the legislature for taking measures to lower the income tax for Kentuckians.
The House passed the bill 90-7 on January 9.
The business community has been a strong advocate for these tax reforms, emphasizing their potential to enhance the state’s economic competitiveness. In conjunction with the legislative developments, the Chamber’s Center for Policy and Research released a new report titled “A Guide to Kentucky Tax Reform,” which examines recent tax reform efforts and outlines the next steps.
The report highlights the benefits of a pro-growth tax structure and provides recommendations for future reforms to ensure sustained economic development in Kentucky.
Stay tuned to The Bottom Line for more updates throughout the legislative session.