Kentucky’s political landscape is seeing a notable divergence within the Republican supermajority as the 2026 legislative session approaches. Senate President Robert Stivers has stated he will not push for an income tax cut in the upcoming session, citing that the state missed the budget triggers required under the 2022 tax cut mechanism by just $7.5 million in revenue. According to Kentucky Public Radio, Stivers emphasized that the legislature should follow the policy it set, even as House GOP leaders like Rep. Jason Nemes argue the legislature should cut taxes anyway. The income tax rate is still set to drop from 4% to 3.5% in January due to prior trigger hits, but a further cut to 3% in 2027 will not happen unless the triggers are met again. Stivers and Senate budget chair Sen. Chris McDaniel have signaled consistency in policy matters, while Gov. Andy Beshear has pointed to a projected $305 million budget shortfall, blaming federal tariffs and past tax cuts, according to Kentucky Public Radio.

On the economic front, the Air Mobility and Aviation Economic Development Task Force has released recommendations urging the General Assembly to support alternative aviation fuels and advanced air mobility, according to the Kentucky Chamber’s Bottom Line. Meanwhile, Covington will receive $750,000 in state funds over five years to support businesses affected by the Brent Spence Bridge Corridor and Fourth Street Bridge projects, as reported by the Cincinnati Enquirer and the city of Covington.

In education and infrastructure, the University of Kentucky accepted a historic $150 million gift from The Bill Gatton Foundation to build a new arts district, including a College of Fine Arts building and a several-hundred-seat theater, according to UKnow.uky.edu. Morehead State University is also moving forward with major campus construction projects under its approved Campus Facility Master Plan, funded in part by the 2022–24 biennial budget, according to Morehead State University’s news site.

Community development is active across the state. In Owensboro, a former mall is being converted into a large Malibu Jack’s indoor entertainment hub, expected to open by April 2026, according to Kentucky Tourism’s December 2025 update. In Lexington, the Railyard workforce housing project has broken ground, creating more than $7.5 million in affordable units, according to Lane Report. Jenny Wiley State Resort Park is undergoing a $5.5 million lodge renovation, with a summer 2026 reopening planned, according to the same tourism update.

Looking ahead, the 2026 legislative session begins January 6, with the budget, education, infrastructure, and aviation policy expected to dominate discussions. The full Senate GOP retreat outcomes and any final decisions on tax policy will be closely watched in the coming weeks.

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