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Kansas Tax Bill Update

On June 6, 2017, the Kansas Legislature overrode Governor Sam Brownback’s veto of a bill that makes a number of changes to personal income taxes, including repealing the exemption for non-wage business income and increasing personal income taxes. The bill is expected to raise $1.2 billion over two years. Summarized below are some of the key components of the new Kansas income tax bill.

 

Business Income Exemption

  • Effective January 1, 2017, the legislation repeals the exemption for certain non-wage business income (this includes business income from flow-through entities and sole proprietorships, rental income and farm income)
  • Reinstates the federal net operating loss deduction

 

Individual Income Tax Rates

  • Personal income tax rates will increase in 2017 and 2018 by replacing the two-bracket system with a three bracket-system:

 

Individual Income Tax Brackets – Married Filing Jointly

 

Taxable Income

Prior Law

Tax Year 2017

New Law

Tax Year 2017

New Law

Tax Year 2018

$0 – 30,000

2.70%

2.90%

3.10%

$30,001 – 60,000

4.60%

4.90%

5.25%

$60,001 & Above

4.60%

5.20%

5.70%

 

Individual Income Tax Brackets – Single

 

Taxable Income

Prior Law

Tax Year 2017

New Law

Tax Year 2017

New Law

Tax Year 2018

$0 – 15,000

2.70%

2.90%

3.10%

$15,001 – 30,000

4.60%

4.90%

5.25%

$30,001 & Above

4.60%

5.20%

5.70%

 

  • No penalties and interest will be assessed for the underpayment of taxes due to changes to the rates as long as such underpayment is rectified by the tax return due date, April 17, 2018

 

Itemized Deductions and Credits

  • Itemized deductions and the dependent care tax credit will remain at the same limited amounts in 2017 but will gradually increase in the following years:

 

Itemized Deductions and Credits

Item

2017

2018

2019

2020

Charitable Contributions

100% of Federal

100% of Federal

100% of Federal

100% of Federal

Medical Expenses

0%

50%

75%

100%

Qualified Residence Interest

50%

50%

75%

100%

Taxes (RE and PPT)

50%

50%

75%

100%

Dependent Care Tax Credit

0%

12.50%

18.75%

25%

 

If you have any questions about the Kansas tax law changes and how they will affect you, please call us at 316-685-1411. We would be glad to assist you with any tax planning needed.