3/20/26
The state budget process moved forward this week.
On Wednesday, the Senate passed its version of the budget (HB 500-SC1) with a unanimous 38–0 vote. The bill was then sent back to the House of Representatives. The House did not agree with the Senate’s version, so the budget will now go to a conference committee, where final decisions will be made.
The Senate’s version of the budget is positive for retired teachers. It fully funds both the pension system and retiree health insurance. It also includes favorable language regarding under-65 health coverage (KEHP). The budget calls for an actuarial review covering 2023–2028 and states that current funding levels are sufficient for the 2027 and 2028 plan years.
We will continue to monitor the process closely and will let you know if anything changes that could impact retirees.
There has been no movement on HR 7361, the “No Tax on Restored Benefits” bill. This proposal would eliminate taxes on certain Social Security lump-sum payments tied to the Social Security Fairness Act.
At this time, the bill has only one co-sponsor and remains in committee. It is unlikely to pass before the April 15 tax filing deadline.
HB 183 – Retirement Income Tax Relief
This bill would increase the amount of retirement income exempt from Kentucky income tax from $31,110 to $41,110, beginning in 2027. It is currently in the House Appropriations & Revenue Committee.
KRTA supports this bill and will continue to monitor it closely.
SB 51 – Property Tax Relief for Seniors (65+)
This bill proposes a constitutional amendment that would prevent increases in the taxable value of a homeowner’s primary residence once they reach age 65. If passed by the legislature, it would go to voters for approval.
The bill has passed the Senate 37–0 and is now in the House Appropriations & Revenue Committee.
KRTA supports this bill and will continue to monitor it closely.
HB 642 – TRS Updates
This bill makes several updates to the Teachers’ Retirement System, including provisions related to return-to-work rules, dependent and disabled children benefits, and investment options. It also reinstates the pension waiver program for teaching positions and adjusts certain thresholds.
The bill has passed the House and is now in the Senate. It is expected to pass.
KRTA supports this bill and will continue to monitor it closely.
Have a great weekend,
Greg Roush, Executive Director