Why Kentucky’s Income Tax Will Go Down Next Year

LOUISVILLE, Ky. — Kentuckians will see a reduction in their income taxes next year.


What do you want to know

  • The decline is triggered by legislation passed earlier this year
  • According to the Department of Revenue, the reduction conditions outlined in the bill have been met and the Kentucky tax rate will drop from 5% to 4.5% for the tax year beginning Jan. 1, 2023.
  • Democratic Governor Andy Beshear vetoed the legislation, but Republican-majority lawmakers overruled his veto
  • Republican lawmakers say their goal is to eliminate income tax altogether

The decline is triggered by legislation passed earlier this year.

Under House Bill 8, certain income benchmarks trigger a reduction in state income tax.

According to the Department of Revenue, the reduction conditions outlined in the bill have been met and the Kentucky tax rate will drop from 5% to 4.5% for the tax year beginning Jan. 1, 2023.

Republicans said the change will encourage people to move to Kentucky.

“Our population is stable, for the most part,” Rep. Ken Fleming (R-Louisville) said. “In order to increase the population, which will generate more revenue, we have to go and see what is most important, which is your personal income tax.”

Republicans say their goal is to eliminate income tax altogether.

“I think no matter where you are on the income spectrum, you’re going to benefit,” Fleming said. “We’re in a time of inflation…and every penny, every dollar that we can save, that we give back to people, to pay people back, that’s a good thing, no matter how big or small it is. ”

The legislation also creates new taxes on certain goods and services, such as electric vehicles and ride-sharing services like Uber.

Rep. Al Gentry (D-Louisville) and other Democrats voted against the measure.

He said it shifts the weight of the tax burden from high earners to low earners.

“The Republican majority leadership wants to move in the direction of all sales taxes and property taxes instead of income taxes,” Gentry said. “What that does is that it benefits the highest earners and it’s more of a burden for the lowest earners, when you look at the amount of tax they have to pay in proportion to the income they earn. .”

Governor Andy Beshear vetoed House Bill 8, but Republican-majority lawmakers overruled the veto.

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