FRANKFORT, Ky. — Kentucky Republicans advanced a bill out of the House that cuts the state’s income tax and puts a system in place where if the state receives enough revenue, the tax gradually goes away.

What You Need To Know

  • Kentucky House lawmakers approved a bill cutting the income tax rate next year to 4 percent

  • House Bill 8 would gradually phase out the state income tax entirely if Kentucky hits certain revenue benchmarks

  • The proposal also includes a new tax on 38 different services, along with a new tax on electric vehicles and on ridesharing services like Uber

  • The bill now moves to the Senate, which passed its own income tax rebate bill this week

“We are competing with 49 other states in truly a global economy, and tax policy moves people,” Rep. Steven Rudy (R-Paducah) said.

House Bill 8 would mean a loss of more than $1 billion per year in state revenue once the tax drops from 5 percent to 4 percent at the start of next year; money that would go back to the taxpayers.

Many Republicans said this will encourage people to move to Kentucky.

“Anybody that’s paying an income tax, this will put money back into their pockets,” Rep. John Blanton (R-Salyersville) said.

The bill would eventually eliminate the state income tax if Kentucky hits certain revenue benchmarks, with supporters saying if Kentucky is able to bring in more revenue, that money should go back to taxpayers.

The bill will also add new taxes to 38 different services, as well as new taxes on electric vehicles and ride-sharing services like Uber.

Every Democrat voted against it, saying the tax changes won’t do anything to help the working class.

“It just shifts the brunt of the tax burden from the higher earners to the lower earners,” Rep. Al Gentry (D-Louisville) said.

The vote came on the same day lawmakers voted to approve a six percent pay increase for themselves and legislative staff, something many Democrats also opposed.  

“It doesn’t even look good,” Rep. Pamela Stevenson (D-Louisville) said. “It doesn’t smell good, that you want the Kentuckians to sacrifice their lives, but you’re not willing to sacrifice and not get a raise for a job that you asked for. It sucks.”

House Speaker David Osborne (R-Prospect) told Stevenson she was out of order immediately following her comment.

“The nasty jokes they tell on this floor about Jewish people and I can’t say something?” Stevenson said to House Minority Floor Leader Joni Jenkins (D-Shively) moments later, referencing comments Rep. Danny Bentley (R-Russell) made on the floor this week about Jewish women during a debate on abortion.

The discussion over House Bill 8 lasted three hours, and eventually broke down to a debate over which party is responsible for Kentucky’s problems.

Rep. Jason Petrie (R-Elkton), the House budget chairman and sponsor of HB 8, said it’s time to try something new.  

“It’s insanity, repeating the same approach over and over and over again and getting the same result,” Petrie said. “But it’s going to be different if we can just tax more and we can spend a little more; throw a little money at the wall, it’ll be different. Wrong! Good lord, stop the insanity.”

House Bill 8 now moves to the Senate, which passed its own income tax rebate bill, so the debate is far from over.