Kansas lawmakers passed major tax cuts on Tuesday that will reduce income taxes and ultimately cost the state an estimated nearly $2 billion over the next five years.
The bill would combine the state’s three income tax brackets into two and lower the top rates to 5.2% and 5.58% respectively. Joint filers would be exempt from paying taxes on their first $25,000 in annual income.
It also eliminates taxes on Social Security benefits, increases the standard deduction and personal exemptions, and raises the residential exemption on state property taxes from $42,000 to $75,000.
“After two years of hard work by our legislative tax committees and multiple vetoes by the governor, long overdue tax relief for all Kansans is now on its way,” Republican House Speaker Dan Hawkins said in a statement.
Notably, the bill does not make changes to the food sales tax, something discussed during previous tax talks. That means the state’s sales tax on groceries will end in January as previously planned.
Democratic Gov. Laura Kelly negotiated the bill with Republican leaders in the House and Senate. Some legislators tried to amend the bill on the floor, but the amendments were all shot down.
Kelly said she plans to sign the bill, which will amount to about $380 million in tax relief per year.
“Although this package is not perfect and emphasizes income tax reductions instead of property tax relief,” Kelly said after the bill passed, “it does provide significant relief while preserving our ability to continue fully funding our public schools, roads and bridges, and State Water Plan.”
The bill was passed during a special session called by Kelly after she vetoed lawmakers’ efforts to pass tax cuts during the regular legislative session. Kelly supports tax cuts but said previous bills were unsustainable and would put the state in debt in future years.
Lawmakers from both parties stressed tax cuts as a top priority this year because the state is sitting on about $4 billion in surplus revenue. That comes in part from an influx of federal COVID relief funding.
During debate on Tuesday, lawmakers from both parties said they hoped to pass more property tax relief next year.
“At worst, we are forcing seniors out of their homes, closing small businesses and strangling our producers’ ability to feed the world,” Republican Rep. William Clifford said.
The bill passed 34-4 in the Senate and 121-2 in the House.
