TOPEKA — The Kansas Legislature created a path for early consideration of a tax overhaul package concentrated on income and sales tax changes that would feature adoption of the single-rate state income tax of 5.25% that Gov. Laura Kelly warned would trigger a veto.
The Senate is expected to complete procedural motions Wednesday to allow for debate on a tax bill on the Senate floor — skipping the regular committee process by clawing together pieces of tax policy debated or voted on by the Legislature during the 2023 session. The bill would be comprised of elements placed into House Bill 2284 that began taking shape one week ago during House and Senate negotiations.
“We may set a new record for getting the tax plan out,” said Rep. Adam Smith, the Weskan Republican who chairs the House Taxation Committee. “I know it feels like we moved very fast on this, but I know a lot of this is carried over from last session and the work we did.”
Under the new bill crafted at the direction of Republican legislators, Kansas would surrender state tax revenue amounting to more than $1.5 billion over three years. That would be significantly larger than the three-year, $1 billion reduction in revenue proposed by Kelly during her new budget.
The plan would replace Kansas’ three-rate income tax format with the flat rate of 5.25%, a foundational tax concept Kelly vowed to veto. It would exempt income of $6,150 for individuals and $12,300 for couples. The state’s standard deduction on income taxes would be indexed to inflation.
Kelly said a flat tax rate was misguided because it primarily benefitted the “super wealthy while doing little to nothing for working, middle-class Kansans.”
“We must get that money back into Kansans’ pockets — and we will — in a fiscally responsible and targeted way,” Kelly said. “In a way that doesn’t threaten progress on all the other issues Kansans care about. Unfortunately, that’s exactly what one proposal — the flat tax — would do. “
The tax bill moving toward votes in the House and Senate would eliminate the state income tax on Social Security benefits, which also was proposed by the Democratic governor.
The measure would eliminate the state sales tax on groceries on July 1 rather than according to a law ending that assessment Jan. 1, 2025. Kelly proposed an immediate end to the final piece of the state food sales tax, which has been trimmed to 2% in the past couple years.
In addition, the bill would exempt the first $100,000 in state property taxes for all Kansas homeowners for the purpose of collecting revenue for the statewide school finance formula. The change would allow for future adjustments linked to inflation.
Senate President Ty Masterson and House Speaker Dan Hawkins, both Republicans, said the legislation should be viewed as a compromise with the governor because it helped retirees and families while addressing the issue of inflation.
“It is built for the future with adjustments for inflation, while moving us toward a simpler, fairer and lower tax structure which would set our state on course for real and sustainable economic growth,” Hawkins and Masterson said in a statement. “We are moving quickly to adopt this plan and are hopeful the governor will meet us in the middle and help us deliver the tax relief all Kansans deserve.”
In 2023, Kelly vetoed two large tax reform bills that the Republican-led Legislature failed to override. Voting on tax legislation early in the 2024 session would identify how legislators intended to approach the issue during an election year, given the entire House and Senate will be up for grabs in November.
“Anxious to get to work on tax policy this year,” said Sen. Caryn Tyson, the Parker Republican and chair of the Senate Assessment and Taxation Committee. “We’ve seen all this before. I’m very anxious we can get it across the finish line. Simplified tax code would help all Kansans.”
