Where will the Kansas Legislature land on taxes?

Today is the 90th day of the legislative session. Leaders are trying to find common ground between allowing the state sales tax to revert to 5.7% as scheduled or to keep it at 6.3% to fund further income tax rate cuts. Stay tuned.

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8 thoughts on “Where will the Kansas Legislature land on taxes?

  1. Senate proposing 4.95% food sales tax rate and 6.3% on other taxable items, with future income tax rate cuts for 2014 through 2018. Deductions other than charity would be slashed beginning in 2014 as I understand it. [Correction: the proposed deduction haircuts are retroactive to 1/1/2013. I am trying to get it clarified that at least the April 15 estimated payment for 2013 not be penalized for failure to anticipate these tax increases.]

    House proposing 6% sales tax rate on all items. I think the other provisions are more or less the same.

    The present 6.3% state rate is set to revert to 5.7% on July 1, 2013.

  2. Gambling losses may be 100% disallowed retroactive to 1/1/2013.

    Other deductions except charitable giving subject to haircut in Senate bill; the House plan would cut back charity, too.

    The deduction haircut is 25% in 2013 with progression to 100% by 2018 under Senate plan, to 50% under House plan.

    No further updates expected until Tuesday, as legislature is adjourned. This is HB 2084 passed by the Senate 5/23/13.

    The impact of the deduction haircut can be more tax than under 2012 & prior law, depending upon how many deductions a taxpayer has that are subject to haircut! Those with average deductions likely see some cut versus 2012, but a significant increase from the laws in effect today.

    gcg

  3. Am now advised the Tax Conference Committee has agreed to 6% flat sales tax and reductions in income tax rates and a deduction haircut. Exact details and a vote expected by Tuesday, 5/28/13.

  4. The final agreement…

    Still only one sales tax rate. Rate currently 6.3%, drops to 6.15% July 1 (was scheduled to drop to 5.7%).

    30% deduction floor for 2013 except charity. No gambling losses. Floor percentage rises 5% per year until 50% in 2017 and later.

    The two rates remain at 3% and 4.9% for 2013, dropping to 2.3% and 3.9% by 2018 with further reductions computed when state revenue growth exceeds 2%.

    Issues under discussion with Kansas Department of Revenue:

    What estimated payments for 2013 are protected from penalties caused or increased by these changes?

    How does the Federal 3% deduction floor interface with the new 30% Kansas floor and the gambling disallowance?

  5. With the deduction haircut applying to standard deductions as well as itemized, here are the net standard deductions after the haircut, with some related thoughts:

    Year Single HoH Add’l S, HoH Joint Add’l Jt

    2013 2100 3850 595 5250 490
    2014 1950 3575 552.50 4875 455
    2015 1800 3300 510 4500 420
    2016 1650 3025 467.50 4125 385
    2017+ 1500 2750 425 3750 350

    I don’t see mention of the standard deduction for dependents, so I presume it remains at 500 nominal (or earned income if greater, up to full amount), or, beginning 2013: 350, 325, 300, 275, 250?

    I had thought that more people would use the standard deduction given the haircut on itemized deductions, but it seems pretty clear the haircut applies to standard deductions, as well.
    The standard deduction haircut has the side effect of requiring more people to file returns for not a lot of added revenue.

    Any dependent earning (even wages) over 350 in 2013 will owe tax, since if they earn 500 for example, the standard deduction is 500x.7=350, leaving taxable income at 150 at a 3% rate = $5. Below 500 the tax is under $5 but a return would still be required even though the tax need not be paid?

  6. Well, that did not format well.
    Anyway, KDOR is thinking the intent was not to haircut the standard deduction, leaving them at 3000 single, 5500 HoH, 7500 Joint, 500 dependent, 850 additonal elderly/blind for single/HoH returns, and 700 additional for joint returns.

  7. Kansas Department of Revenue positions:

    They will treat gambling losses as disallowed in 2013, even though the law says years beginnning after 1/1/2013.

    They are unsure how 2013 estimated tax penalties will apply where impacted by the new provisions.

    They are going to get back to me as to why the state can take away deductions after people already engaged in economic activity based on laws in existence… (gambling and 30% haircut).

  8. KDOR has delayed (tentatively) the gambling disallowance until 2014 per the statutory language.
    Of course, 30% of these deductions will be sheared in the haircut.

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