TOPEKA — Gov. Laura Kelly and a bipartisan group of two dozen state legislators Monday proposed a $1 billion, three-year tax reform bill designed to provide every Kansan relief by reducing income, sales and property taxes.
The Democratic governor, two Republican senators, an independent senator as well as House and Senate Democrats endorsed the comprehensive strategy at a Statehouse news conference hours before the 2024 session would begin.
The legislation would eliminate immediately the state’s sales tax on groceries rather than wait until existing state law accomplished that step on Jan. 1, 2025. It would create a four-day, back-to-school sales tax holiday every August for families buying school supplies, computers and clothing. That could save Kansas consumers $5 million annually.
The plan would end the state’s policy of taxing Social Security benefits. Kansas is among 11 states that impose a state tax on Social Security benefits, resulting in seniors leaving the state in search of a lower tax burden. Retired Kansans would save more than $525 million in the first five years of this plan.
The legislation would include an increase the standard deduction on state income taxes. For a single Kansan, it would rise from $3,500 to $5,000. For married couples filing jointly, it would climb from $8,000 to $10,000. This component of the plan would save Kansans over $200 million in three years.
It would exempt the first $100,000 in state property taxes for all Kansans homeowners. Fully implemented, the residential property tax provision would help Kansans save $100 million annually and lower the state property tax for 370,000 homeowners to less than $20 per year.
In addition, the proposal would double the child and dependent care tax credit for savings of $18 million over three years.
“We’re going to be putting money back in your pockets,” said Kelly, with GOP and Democratic lawmakers at her side at the Capitol. “We’re going to do it in a fiscally responsible, targeted and sustainable way. I don’t think anyone had this team on their 2024 predictions list, but here we are, united in our desire to cut taxes for every single Kansan.”
Kelly affirmed her intention to veto, as she did in 2023, legislation shifting Kansas to a single-rate individual income tax. Senate President Ty Masterson and House Speaker Dan Hawkins, both Republicans, have indicated their legislative agenda made adoption of a flat-tax one of their top priorities this session.
“A simpler, single-rate tax is needed to keep Kansas’ economy competitive with surrounding states,” Hawkins said. “It seems we’re going to pick up right where we left off last session. I’m disappointed, but not surprised, to see the governor playing politics with taxpayers’ money once again.”
One year ago, Republican leadership in the House and Senate pushed through a bill containing a 5.15% flat rate regardless of whether a person made $25,000, $250,000 or $2.5 million annually. Kelly vetoed it, and the Senate fell short of votes necessary to override her.
“Let me be clear, the flat tax is a nonstarter,” the governor said. “The people who would benefit the most from a flat tax by far are those making $250,000 per year or more. There is no evidence to suggest a flat tax does anything to drive growth.”
Sen. Rob Olson, an Olathe Republican who voted to sustain Kelly’s veto of the 2023 flat tax legislation, said he supported the bipartisan tax reform plan outlined by the governor.
“It’s got a lot of really good pieces,” he said. “I believe it’s a fair tax plan. It helps everybody from top to bottom. I really applaud the governor for putting this bill together with the parties that worked together on it. I look forward to this passing.”
Sen. Dinah Sykes, a Democrat from Lenexa, said she appreciated formation of a bipartisan tax reform bill that would provide a cut for every Kansan. She said provisions related to property tax and child care tax credits would benefit the middle class.
