Kentucky’s Consensus Forecasting Group met Monday in Frankfort and some of their projections focused on the effects of state income tax cuts passed the last few years. Greg Harkenrider, the deputy director for the state budget office, laid out the expected drops in income tax revenue for the next three years.
“Fiscal 24 is negative $488 million, fiscal 25, negative $823 million and fiscal 26 is $812.3 million dollars.”
Over the last several years, the General Assembly lowered income tax rates, but added more than two dozen services to the list of those for which Kentuckians pay sales tax. Monday, Harkenrider noted the legislature set two conditions for further cuts in the income tax rate after next year’s drop to 4 percent.
“The rate reduction conditions were not met in fiscal 23. So there'll be no rate reduction at 1-1-25 unless the General Assembly comes in and passes new legislation.”
Harkenrider noted general fund revenues jumped considerably in 2021 and 2022 and attributed at least some of that to federal pandemic-era funding.
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