Richard White State Representative

LEGISLATIVE UPDATE
Representative Richard White
Kentucky’s revenue growth shows smart tax reform and economic strength can go hand in hand

For years, critics have warned that reducing Kentucky’s individual income tax would jeopardize the state’s finances, threaten essential services, and leave future budgets on unstable footing.

Every time the General Assembly has taken steps to make Kentucky’s tax structure more competitive, opponents – including the governor - have predicted declining revenues and budget shortfalls. The latest revenue numbers tell a very different story.

According to the Office of State Budget Director, Kentucky’s General Fund receipts reached a historic milestone in April, totaling more than $2 billion for the first time ever. Collections came in 15.2% higher than April of last year at $2.013 billion, an increase of $265.5 million.

That is not a small achievement. April is traditionally Kentucky’s strongest revenue month because of tax filing deadlines, but even by those standards, this year’s performance stands out. The increase pushed General Fund receipts to 1.7% growth through the first 10 months of Fiscal Year 2026, despite an official revenue estimate that projected a 1.3% decline for the year.

In practical terms, revenues could decline by more than 16% over the final two months of the fiscal year and still meet expectations.

The strongest growth came from Kentucky’s largest revenue sources. Sales and use tax collections, business taxes, and individual income taxes combined to generate $223 million more than they did in April 2025. Individual income tax net returns alone increased by nearly $120 million compared to the same month last year.

These numbers matter because they directly challenge a narrative that has persisted throughout the legislature’s efforts to reform our tax code. Opponents have repeatedly suggested that lowering the individual income tax would inevitably lead to budget shortfalls and fiscal instability. Yet, Kentucky continues to post strong revenue performance while simultaneously reducing the tax burden on workers, families, and job creators.

That outcome is not accidental. While we modernized taxes across the board to make them reflect today’s marketplace and economy, the biggest results can be seen in the individual income tax – the tax paid by those who are working or have worked for their money. Since 2018, the legislature has cut the individual income tax from 6% to 3.5%, and laid the groundwork for further cuts. It will not happen overnight, but it will happen when it should because our approach has been as intentional as it has been responsible. With the passage of HB 8 in 2022, we created conditions that must be met before any reduction in the individual income tax can take effect. Those triggers protect the necessary services and functions of government, while emphasizing responsible spending and investing. The goal is to create a tax structure that encourages investment, rewards work, attracts employers, and positions Kentucky to compete successfully with neighboring states.

The latest revenue report suggests that strategy is working. At the same time, it highlights the difference between carefully structured tax policy and short-term political gestures.

Recently, the governor released an executive order suspending a scheduled increase in the motor vehicle fuel tax (we usually call it the gas tax) and cutting it by 10 cents a gallon. That executive order is set to expire and he has called on local governments to request and extension. The governor continues to tell Kentuckians he is providing relief through reductions in the gas tax. In reality, the motor fuels tax is one of the least targeted ways to help Kentucky families because it only saves an estimated $5 a month and even that benefit is shared equally by everyone who purchases fuel, including out-of-state motorists traveling through Kentucky. Meanwhile, the revenue generated by the gas tax is a primary source of funding for road maintenance, bridge repairs, transportation improvements, and highway safety projects.

Kentucky is giving the same tax break to drivers from Tennessee, Ohio, Indiana, and beyond while reducing the resources available to invest in the infrastructure Kentuckians rely on every day. If the objective is relief for Kentucky families, there are more effective options. Direct tax relief tied to income, work, and economic growth provides lasting benefits to Kentucky residents without undermining dedicated funding streams for transportation. Allow working families to keep more of what they earn without costing them more in the long run.

The contrast is clear. One approach focuses on careful planning, clear revenue tracking, and building a competitive economy with good-paying jobs. The other provides a small benefit that benefits people who do not even live in Kentucky while jeopardizing future investments in road safety and infrastructure.

As the fiscal year draws to a close on June 30, Kentucky’s record-setting revenue performance offers strong evidence that the General Assembly’s approach is working. Growth, investment, and disciplined fiscal management remain the most sustainable path to long-term prosperity—and Kentucky is proving it.

As always, I can be reached anytime through the toll-free message line in Frankfort at 1-800-372-7181. You can also contact me via email at [email protected] and keep track through the Kentucky legislature’s website at legislature.ky.gov.

The official signage is now in place at the Don McKenzie Memorial Bridge.

Superintendent Ralph Hamilton, Ryan Quarles, Shawn McKenzie, Donnie’s son, and I visited the memorial together last week. While Donnie is deeply missed by many, his legacy of service and community continues to live on.

I’m grateful for Superintendent Ralph Hamilton’s partnership in making this happen.