Paychecks could jump in January as new ‘Income Tax’ law takes effect — here’s what changes

Kentucky income tax cut: Kentuckians will soon see more money in their paychecks. A new income tax law reduces the state's individual income tax rate from 4% to 3.5% starting in 2026. This change aims to put more earnings back into the hands of workers. Households could save around $323 annually. Other states are also cutting income taxes.