Democrat Beshear signs GOP’s top priority – another income tax cut – into Kentucky law
Republished from Kentucky Lantern
As expected, Democratic Kentucky Gov. Andy Beshear signed into law another cut to the state’s income tax rate Thursday, saying that “things cost too much for our families” despite a “booming economy.”
Beshear speaking in a video posted on X, formerly Twitter, said worries about increasing prices at the grocery store and gas pump are coinciding with the threat of tariffs implemented by the Trump administration that “would raise prices on virtually everything.” The Democrat said signing into law another income tax rate cut is about giving money back to Kentuckians amid higher prices.
Beshear had previously said he intended to sign House Bill 1, the legislation cutting the income tax rate.
Not total déjà vu, but Kentuckians can expect another income tax cut
HB 1, sponsored by Rep. Jason Petrie, R-Elkton, lowers the individual income tax rate from 4% to 3.5% effective Jan. 1, 2026. According to a fiscal note, the change will decrease state revenues by an estimated $718 million annually. The Republican-controlled legislature in 2022 reduced the rate by a half percentage point from 5% and by the same amount again in 2023.
The legislation, a top priority for the GOP-controlled state legislature, gained some bipartisan support from the minority of Democrats as it passed through both chambers, echoing Beshear’s support of the bill. Other Democrats opposed to the legislation argued the reduction of revenue would hamper the state’s ability to provide government services in the future.
Republicans have touted the bill as part of an eventual move to eliminate the state’s income tax completely, aligning Kentucky with nine states that have no income tax, including Tennessee.
Inflation across the economy has slowed going into 2025, but the threat of tariffs levied by the Trump administration against Mexico, Canada and China have raised concerns over rising prices amid potential trade wars. Threatened tariffs against Mexico and Canada have been put on hold after both Canada and Mexico pledged to boost border security. An additional 10% tariff on a wide range of Chinese goods has gone into effect, expected to raise prices on goods including toys and electronics.
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