June 2, 2013
Republican Gov. Sam Brownback is expected to sign the tax plan pushed through the Kansas Legislature by its GOP leaders.
The measure raises new revenues for the state to prevent future budget shortfalls while still cutting individual income tax rates in the future. It's designed to close projected budget cuts caused by massive income tax cuts enacted last year to stimulate the economy.
The House approved it early Sunday, 69-45, after the Senate passed it, 24-13. The measure emerged from private negotiations Saturday between the governor and GOP legislative leaders.
Brownback publicly endorsed it and called it a "fabulous package."
It sets the sales tax at 6.15%. The tax is now 6.3% but has been scheduled to drop by law to 5.7%, also in July.
Highlights of the tax plan approved early Sunday by the Republican-controlled Kansas Legislature and sent to GOP Gov. Sam Brownback, who has promised to sign it:
Overall, the plan would result in a net gain in revenues for the state of $777 million over the next five years, according to the Legislature's non-partisan research staff. But supporters note that massive personal income tax cuts enacted last year are worth $4.6 billion for the same period.
SALES TAX ADJUSTED
The state's sales tax would be 6.15 percent, starting in July. The tax is now 6.3 percent but had been scheduled to drop to 5.7 percent, also in July, under a 2010 law.
INCOME TAX RATES
The state set its personal income tax rates for 2013 at 3 percent on the first $30,000 of income for married couples and on the first $15,000 of income for single filers. The rates would be phased down to 2.3 percent and 3.9 percent for 2018.
INCOME TAX DEDUCTIONS
The value of income tax deductions, including those for interest paid on home mortgages, would decline as tax rates decline. Filers could claim only half the value of their present deductions for 2018, though a full deduction for charitable contributions would be maintained. The state would eliminate its deduction for gambling losses.
Last year's tax law boosted the standard income tax deductions for married couples from $6,000 to $9,000 and for individual heads of household from $4,500 to $9,000. They'd be reduced to $5,500 for individuals and $7,500 for married couples.
FUTURE TAX CUTS
If state revenues grew by more than 2 percent in a given year, that growth would trigger additional reductions in income tax rates.
FOOD TAX REFUND
Kansas previously had a program allowing poor and working-class families to claim an income tax credit against the sales tax they paid on groceries. Last year, lawmakers eliminated the program, but it would be reinstated, except that filers wouldn't receive a refund if the credit exceeds the amount of taxes they'd otherwise owe.