Kentucky’s legislature, dominated by the Republican party, kicked off its 30-day session on Tuesday, marking the beginning of discussions aimed at reducing the state’s individual income tax rate. Additionally, GOP lawmakers are expected to continue their efforts to limit diversity, equity, and inclusion (DEI) initiatives within colleges and universities across the state.
The House and Senate opened their sessions amid the usual ceremonial flair, despite many constituents grappling with the aftermath of a severe winter storm. New legislators were welcomed, and multiple bills were introduced in both chambers. Democratic Governor Andy Beshear is scheduled to outline his priorities during his State of the Commonwealth address on Wednesday evening.
With supermajorities established in both legislative chambers, Republican lawmakers will drive the agenda and the fate of forthcoming legislation. Their substantial majority allows them to override any vetoes issued by the governor.
Among the key priorities this session is a proposal to lower the individual income tax rate from 4% to 3.5%, slated to take effect in 2026. Republican leaders noted last year that the state had fulfilled the financial criteria necessary to initiate another tax rate cut.
In the midst of the session’s opening, Governor Beshear reiterated his support for reducing the tax, remarking, “I think we can handle one more income tax reduction, especially with our economy booming.” Beshear is among the Democratic governors being speculated as possible contenders for the party’s presidential nomination in the 2028 election.
Since the passing of a tax reform in 2022, Kentucky’s personal income tax has experienced gradual reductions in half-percentage-point increments, contingent upon ensuring that revenue remains adequate to support state expenditures.
Across the nation, many states have implemented some form of tax relief or rebate in response to rising budget surpluses over recent years. However, as the growth in revenues slows, this trend towards tax reductions may also begin to taper off, though some states are poised to discuss further tax cuts.
Property tax reductions are high on the priority list in several states, particularly for Republicans overseeing legislatures in Kansas and Wyoming. In Utah, Governor Spencer Cox, a Republican, has suggested eliminating the state tax on Social Security benefits, while New York Governor Kathy Hochul, a Democrat, has put forth plans to significantly expand the state’s child income tax credit.
Kentucky’s legislators will also revisit unfinished business from the previous year, especially the initiative to constrict DEI efforts at public universities. Anti-DEI legislation did not pass last year in Kentucky due to disagreements between the House and Senate, representing a notable setback for Republicans on a contentious issue. This movement reflects a larger conservative agenda in GOP-controlled states to diminish DEI practices.
The anticipated revival of DEI legislation in 2025 has prompted action from some educational institutions. For instance, the University of Kentucky disbanded its office dedicated to promoting diversity and inclusion last August after receiving inquiries from state officials. The university’s leadership emphasized their commitment to core values, including protecting academic freedom and fostering a sense of belonging for all members of their campus community, irrespective of background or viewpoint.
Lawmakers may also deliberate on enhancing oversight of Medicaid—a joint program funded by federal and state resources that provides healthcare for low-income individuals and those with disabilities in Kentucky. Republican state Representative Adam Bowling noted that Medicaid represents a substantial portion of the state budget, covering over a third of Kentucky’s populace. “We have a deeply vested interest in ensuring that the program is operating effectively and efficiently for both those who rely on it and the taxpayers who finance it,” he stated recently.
Despite not having to draft a state budget this year due to the passage of a two-year budget in 2024, lawmakers might consider reopening the budget to enact adjustments or include new spending provisions.
This week’s legislative meetings will subsequently lead to a recess, with lawmakers scheduled to reconvene in early February for the 2025 session, which is slated to conclude in late March.
