FRANKFORT – Republican lawmakers wasted no time advancing a bill on the second day of this year’s legislative session to further reduce Kentucky’s individual income tax rate. The bill is a top GOP priority and would move Republicans closer to their goal of eventually eliminating the tax altogether.  Not total déjà vu, but Kentuckians can expect another income tax cut All Republicans on the House Appropriations and Revenue Committee voted Wednesday to approve House Bill 1, sponsored by committee chair Rep. Jason Petrie, R-Elkton, which would reduce the individual income tax rate from 4% to 3.5% effective Jan. 1, 2026. The Republican-controlled legislature in 2022 reduced the rate by a half percentage point from 5% and by the same amount again in 2023. The minority of Democrats passed on the bill. The committee vote sets up the legislation to be potentially voted on and passed by the GOP-dominated Kentucky House of Representatives before the end of this week when the legislature adjourns until February.  Republicans have remained optimistic about continuing to cut the state’s income tax rate, one of the largest sources of state revenue, despite differing economic conditions facing the state as the influx of COVID-era monies has faded.  Jason Bailey expresses concern over further reducing the state’s income tax rate, Jan. 8, 2024. (Kentucky Lantern photo by Liam Niemeyer) Democratic Gov. Andy Beshear’s budget office has projected a decline in General Fund revenue in this fiscal year compared to the previous year, the first decline in modern times not caused by an economic downturn. Republicans in the legislature have countered that actual revenues are up through the initial months of this fiscal year and the state Budget Reserve Trust Fund, also known as the “rainy day” fund, is healthy.  “No one has a perfect crystal ball, but on good economic projections and modeling, it looks good,” Petrie told the Lantern. “We’re in a good spot. We’re in a very manageable spot.”  Republicans continued to hear warnings from the progressive think tank Kentucky Center for Economic Policy (KCEP) that cutting further into the state’s income tax could cause potential harm to government services in the future if an economic recession occurred, particularly for poorer and rural communities that rely on state dollars.  Rep. Al Gentry, D-Louisville, said he’d like to look at more data before voting on a bill to further reduce the state’s income tax rate. (Kentucky Lantern photo by Liam Niemeyer) “A squeezed state budget can easily mean fewer jobs at hospitals, health and treatment clinics, schools, community colleges and more,” said KCEP Executive Director Jason Bailey in testimony to lawmakers. “I urge you to approach a permanent decision like this with some caution and with a full picture of the fiscal risk to your constituents and your communities.”  Beshear had signaled he wouldn’t stand in the way of another income tax rate cut, though Democrats on the committee expressed caution about the legislation. Rep. Al Gentry, D-Louisville, passed on the bill arguing he wanted to “look at data a little more” and believed an income tax rate cut would benefit wealthier Kentuckians more than poorer Kentuckians. The post Another cut in Kentucky’s income tax is rolling as Republicans advance House Bill 1 appeared first on The Lexington Times.