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KY HB1

KY HB1
AN ACT relating to the individual income tax rate.


summary

Introduced
01/07/2025
In Committee
02/04/2025
Crossed Over
01/09/2025
Passed
02/05/2025
Dead
Signed/Enacted/Adopted
02/06/2025

Introduced Session

2025 Regular Session

Bill Summary

Amend KRS 141.020 to reduce the individual income tax rate from 4% to 3.5% for taxable years beginning on or after January 1, 2026.

AI Summary

This bill amends Kentucky Revised Statutes (KRS) 141.020 to reduce the individual income tax rate from 4% to 3.5% for taxable years beginning on or after January 1, 2026. The bill establishes a complex mechanism for potential future tax rate reductions that depends on specific fiscal conditions, including the balance in the Budget Reserve Trust Fund (BRTF) and General Fund (GF) revenues. Under this mechanism, the Office of State Budget Director must review reduction conditions for the fiscal year 2024-2025 by September 1, 2025, and report to the Interim Joint Committee on Appropriations and Revenue whether certain financial thresholds have been met. If the conditions are satisfied, the General Assembly may take action to reduce the tax rate for the taxable year beginning January 1, 2027. The bill continues an existing annual process for potential future tax rate reductions, with the ultimate goal of potentially reducing the income tax rate to zero over time. The reduction conditions include maintaining a BRTF balance of at least 10% of General Fund moneys and ensuring that General Fund moneys are equal to or greater than appropriations plus the calculated "IIT equivalent" (a measure of potential revenue impact from tax rate changes).

Committee Categories

Budget and Finance

Sponsors (47)

Jason Petrie (R)* Kim Banta (R),  Jared Bauman (R),  Adam Bowling (R),  Josh Branscum (R),  Josh Bray (R),  Randy Bridges (R),  Emily Callaway (R),  Mike Clines (R),  Stephanie Dietz (R),  Daniel Elliott (R),  Patrick Flannery (R),  Ken Fleming (R),  Deanna Frazier Gordon (R),  Chris Freeland (R),  Chris Fugate (R),  Vanessa Grossl (R),  David Hale (R),  Tony Hampton (R),  Mark Hart (R),  Samara Heavrin (R),  Thomas Huff (R),  Kevin Jackson (R),  D.J. Johnson (R),  Kim King (R),  Matt Koch (R),  William Lawrence (R),  Chris Lewis (R),  Matt Lockett (R),  Bobby McCool (R),  Shawn McPherson (R),  David Meade (R),  Suzanne Miles (R),  Amy Neighbors (R),  Jason Nemes (R),  David Osborne (R),  J.T. Payne (R),  Steve Riley (R),  T.J. Roberts (R),  Steven Rudy (R),  Tom Smith (R),  Walker Thomas (R),  Aaron Thompson (R),  Timmy Truett (R),  Ken Upchurch (R),  Mitchum Whitaker (R),  Wade Williams (R), 

Last Action

signed by Governor (Acts Ch. 1) (on 02/06/2025)

bill text


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bill summary

Document Type Source Location
State Bill Page https://apps.legislature.ky.gov/record/25RS/hb1.html
BillText https://apps.legislature.ky.gov/law/acts/25RS/documents/0001.pdf
Senate Floor Amendment 2 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/SFA2.pdf
Fiscal Note to Senate Floor Amendment 1 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/SFA1FN.pdf
Senate Floor Amendment 1 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/SFA1.pdf
BillText https://apps.legislature.ky.gov/recorddocuments/bill/25RS/hb1/bill.pdf
Vote History for HB1 https://apps.legislature.ky.gov/record/25RS/hb1/vote_history.pdf
Fiscal Note to House Floor Amendment 11 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/HFA11FN.pdf
House Floor Amendment 11 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA11.pdf
House Floor Amendment 10 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA10.pdf
Fiscal Note to House Floor Amendment 9 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/HFA9FN.pdf
House Floor Amendment 9 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA9.pdf
Fiscal Note to House Floor Amendment 8 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/HFA8FN.pdf
House Floor Amendment 8 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA8.pdf
House Floor Amendment 7 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA7.pdf
Fiscal Note to House Floor Amendment 6 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/HFA6FN.pdf
House Floor Amendment 6 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA6.pdf
House Floor Amendment 5 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA5.pdf
House Floor Amendment 4 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA4.pdf
Fiscal Note to House Floor Amendment 3 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/HFA3FN.pdf
House Floor Amendment 3 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA3.pdf
House Floor Amendment 2 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA2.pdf
Fiscal Note to House Floor Amendment 1 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/HFA1FN.pdf
House Floor Amendment 1 https://apps.legislature.ky.gov/recorddocuments/bill/25RS/HB1/HFA1.pdf
BillText https://apps.legislature.ky.gov/recorddocuments/bill/25RS/hb1/orig_bill.pdf
Fiscal Note for HB1 https://apps.legislature.ky.gov/recorddocuments/note/25RS/hb1/FN.pdf
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