Kentucky Passes Bill to Cut Income Tax to 3.5%

The Kentucky General Assembly has passed House Bill 1, reducing the state's individual income tax rate from 4% to 3.5%, marking a significant legislative step in the 2025 session. The bill received substantial bipartisan support, passing the Senate with a 34-3 vote and is expected to be signed into law by Democratic Governor Andy Beshear. This tax reduction is part of a broader Republican initiative to potentially eliminate the state income tax entirely if certain fiscal conditions are met. Despite its passage, some Democratic lawmakers expressed concerns over the tax cut's disproportionate benefits to wealthier residents and potential future funding challenges. Meanwhile, Kentucky's House Democratic Caucus has prioritized initiatives on public school funding, affordable housing, and workers' rights, seeking common ground with Republicans. The legislative session also focuses on addressing housing issues, workforce participation, Medicaid, and the implications of federal executive orders on state policies.