House Bill 1, which cuts the state’s individual income tax from 4% to 3.5%, passed the Senate chamber by a 34-3 vote Tuesday, the first day lawmakers returned to Frankfort after a three-week hiatus. It’ll go into effect Jan. 1, 2026.
The Kentucky General Assembly’s first approved bill of the 2025 legislative session has landed Gov. Andy Beshear’s signature.
The three no votes were Democratic Sens. Karen Berg, Cassie Chambers Armstrong and Gerald Neal, who are all from Louisville.
Chambers Armstrong said while she values putting money back into the pockets of Kentuckians, she was concerned that the people “who are making the most money stand to receive the most benefits” from the legislation.
She added she was worried about “cutting our revenues at times of economic uncertainty,” particularly with decisions being made at the federal level.
“We don’t know what tariffs, if any, might be coming,” Chambers Armstrong said. “We don’t know what federal funds, if any, might be going away. We don’t know what impact that is going to have on us here in the state.”
Meanwhile, Sen. Christian McDaniel, R-Ryland Heights, said the General Assembly is going to do everything in its power to lower taxes, and “that’s what HB 1 is all about.”
“We stand here today having made practical investments in the public sphere in order to stabilize finances that were left in shambles by generations before any of you sat in here to ensure that this commonwealth is positioned to be the leader that its people deserve,” McDaniel said.
Ahead of the session, several prominent Republicans said lowering the tax would be the first priority and a coordinated effort between the two chambers.
The proposed cut was made possible by a 2022 bill that would gradually cut the state’s income tax if certain triggers were met, based on the state’s revenue and rainy day fund balance. In August 2024, Republican leaders announced the state’s budget hit it’s triggers to lower the tax rate another .5%.
