Bluegrass Institute applauds final passage of 2024 income tax rate reduction, budget chairmen's leadership

For Immediate Release: Wednesday, February 8, 2023
Contact: Jim Waters @ (270) 320-4376

The Bluegrass Institute for Public Policy Solutions (BIPPS) issued the following statement in response to today’s final passage of House Bill 1 (HB 1) by the Kentucky Senate reducing the state’s individual income tax rate from 4.5% to 4%, effective Jan. 1, 2024. The state House passed the bill during the first week of this year’s General Assembly session.

Today’s passage of HB 1 by the state Senate demonstrates that reducing Kentuckians’ overall tax burden and improving the commonwealth’s economic competitiveness remain among the Kentucky General Assembly’s top priorities.

For years, the Kentucky Senate frequently held the line against policies that would have taken Kentucky further in the wrong direction. Today, it provided final passage for a policy that represents a big step forward in placing the Bluegrass State and its citizens on a path toward a more prosperous future.

Passage of HB 1 follows the conditions established by legislation during last year’s General Assembly triggering reductions in the income tax rate if revenues for the previous fiscal year exceed expenses, cover the cost of the tax-rate reduction and maintain a Budget Reserve Trust Fund balance of at least 10% of General Fund revenues.

The action follows on the heels of legislative approval last year which lowered this year’s rate from 5% to 4.5%. Kentucky was one of 10 states which lowered their individual income tax rates for 2023.

We applaud the leadership of both chambers for taking a thoughtful approach by incrementally reducing the individual income tax rate, which will encourage greater productivity, savings and investment while ensuring the commonwealth remains well-prepared to address future economic downturns or natural disasters. 

Taxpayers owe Rep. Jason Petrie, R-Elkton, and Sen. Chris McDaniel, R-Ryland Heights, chairmen of the House and Senate appropriations committees respectively, a debt of gratitude for their leadership in creating and shepherding this policy through the legislative process.

We urge Democratic Gov. Andy Beshear to show bipartisan support for taking another important step toward growing our commonwealth’s population and prosperity by signing this bill, which requires state government to live within its means so Kentuckians can keep more of their hard-earned dollars.

For more information or comment, please contact Bluegrass Institute president and CEO Jim Waters at (270) 320-4376 or jwaters@freedomkentucky.com.