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On March 9, Bluegrass Institute CEO Caleb O. Brown was joined by Buckeye Institute Vice President of Policy Rea Hederman to present lawmakers with new research on the economic impact of Kentucky's ongoing income tax reform. The joint report, produced using Buckeye's peer-reviewed dynamic macroeconomic model, finds that reducing the personal income tax rate to 3.5% in 2026 is projected to generate more than $500 million in economic growth, create over 2,000 new jobs, spur $260 million in new business investment, and put $200 million more in consumer spending back into the Kentucky economy. Over the next decade, the compounding effects of reform could push those gains to nearly $2 billion in GDP growth and 7,000 new jobs.
The report also models a bolder scenario: reducing the rate further to 3% in 2027. That move would produce an estimated $810 million in GDP growth in its first year alone, nearly $400 million in business investment, and close to 3,000 new jobs. With Kentucky's strong fiscal position and growing competition from states like Ohio—which is moving to a 2.75% flat rate—the case for staying the course and going further has never been stronger.
Read the full report here.
