Kentucky residents will see their individual income tax rate go down at the start of 2026. State lawmakers passed a bipartisan bill, House Bill 1, to lower the tax to 3.5% from 4%. On Tuesday, Gov. Andy Beshear signed HB1 saying Kentucky is experiencing a booming economy but it’s time to help families who may be hurting financially.

Lowering the income tax rate has been a priority for Republican lawmakers in recent years. Gov. Andy Beshear signed the bill Thursday.

Democratic Gov. Andy Beshear has signed a Republican-backed measure to further reduce Kentucky’s income tax. The state's personal income tax will be lowered from 4% to 3.5% percent on Jan. 1, 2026.