Senate President Robert Stivers (R) and House Speaker David Osborne (R) have made sure Kentucky will remain at the forefront of a growing movement of states that are working to reduce and phase out their income taxes. Thanks to legislation they delivered earlier this year, Kentucky’s individual income tax is officially on the path to zero.
Under this new law, Kentucky’s income tax can be reduced up to 0.5 percentage points every year certain triggers are met until the income tax is phased out completely. State officials have announced that the first trigger, which allows the rate to be reduced from 5% to 4.5%, has already been met and the new, lower rate will take effect in January 2023.
Grover Norquist, president of Americans for Tax Reform, and President Stivers recently met to discuss the many benefits of this big victory.
“This pro-growth income tax cut is a huge win for all Kentuckians,” said Norquist. “It will allow all income taxpayers to keep more of their hard-earned money and, by putting a full elimination of the state income tax in law, will allow Kentucky to start competing with the no income tax states. Attracting new jobs and better opportunities to the state is a win for everyone.”
“We’ve made a historically significant change in our tax structure during this past session that will posture Kentucky for solid economic growth over the next five years,” said President Stivers. “States that have moved to a consumption-based tax are attracting business and people to their state and this move poises Kentucky to be competitive for these new opportunities.”
There are currently eight states that do not impose individual income taxes of any kind: Texas, Florida, Tennessee, Nevada, Wyoming, South Dakota, Washington, and Alaska. New Hampshire, which does not tax wage income, is slated to become the ninth no income tax state as soon as it completes a 5-year phase out of its tax imposed on interest and dividends income.
Noticing that people and jobs continue to move out of high tax states and into states that impose lower and no income taxes, more and more states are working to the tenth state added to the “no income tax” list.
Thanks to work of President Stivers and Speaker Osborne, Kentucky is now a leader in this movement towards no income taxes.