Lowering the state income tax has been a priority for lawmakers during the start of the 2025 session of the Kentucky General Assembly, and on Tuesday State Representative Jason Petrie hosted a town hall in Hopkinsville discussing the measure.
Petrie has been a representative for Logan, Todd and part of Christian County since 2017 and also serves as the chair for the Kentucky House Appropriations and Revenue Committee.
The 2025 legislative session got underway on January 7 and will resume in February. Before lawmakers adjourned, House Bill 1 was submitted to the Senate for consideration. If approved by the Senate, the bill would lower the state income tax from 4% to 3.5% starting January 2026 which is a step toward getting the tax down to zero.
Petrie says efforts to lower the income tax began in 2018 and a formula has been created to ensure that the rate can be safely lowered. Petrie says just automatically lowering the rate to zero would be irresponsible, because then lawmakers would have to find the money elsewhere to compensate for the loss.
For the rate to decrease, Petrie says their budget balance has to increase by double the amount of the revenue that 0.5% state income tax would cultivate.
Petrie says the bill has been reviewed by the Senate Appropriations and Revenue Committee and he is optimistic that the Senate will approve it.
With the income tax set to possibly decrease, questions have arose concerning if any other taxes will increase to compensate. Petrie says no other taxes are set to increase and instead, lawmakers will focus on reducing spending. A reduction in spending does not mean a reduction in programs.
Petrie says they will also not be relying on any budget reserves to make up for the tax decrease. The General Assembly will reconvene in Frankfort on February 4.