Kentucky dropped its income tax rate from 4% to 3.5% in 2026. While the cut means more money in your wallet, it also slashes state revenue by more than $700 million each year.

In the address, Beshear made proposals for investments in housing, jobs and health care for Kentuckians.

Final passage came on a 34-3 Senate vote to lower the tax to 3.5% from 4% at the start of 2026.