Governor signs House Bill 1, dropping State Income Tax from 4.0% to 3.5%

Kentucky lawmakers reconvened in Frankfort on Tuesday, resuming their legislative session and advancing a key priority: income tax reduction. ¹ The Senate approved House Bill 1, which will decrease the state’s income tax rate from 4% to 3.5% beginning in 2026. ² House Speaker David Osborne emphasized the bill’s importance, noting it was the House’s top priority and has already been passed and signed by the legislature. Governor Andy Beshear signed the Bill Thursday, making it go into effect January 1, 2026. Looking ahead, lawmakers will focus on improving government efficiency