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Minutes for SB33 - Committee on Taxation
Short Title
Exempting all social security benefits from Kansas income tax.
Minutes Content for Tue, Mar 14, 2023
Adam Siebers provided an overview on SB33 that made changes for the Kansas income tax subtraction modifications. (Attachment 1) Mr. Siebers stood for questions from Committee members.
Kathleen Smith, Kansas Department of Revenue, provided an overview on the fiscal note for SB33 as amended by the Senate Committee of the whole is estimated to reduce the State General fund receipts by $280.2 million in FY 2024, $440.5 million in FY 2025, and $451.4 million in FY 2026. The supplemental note on SB33 as amended by the Senate Committee of the whole does provide a table on Page 6 listing each of the components and the fiscal impact associated with each. Ms. Smith stood for questions from the Committee members. The supplemental note for SB33 was sent to Committee members.
- Component 1 is the work opportunity and employment retention credit effective for tax year 2020 and all years thereafter. Fiscal impact for FY 2024 is estimated to be $7.0 million, FY 2025 is estimated to be $2.5 million, and FY 2026 is estimated to be $1.1 million.
- Component 2 is full exemption of social security benefits effective tax year 2023. The fiscal impact for FY 2024 would be $147.6 million, FY 2025 is $117.2 million, and FY 2026 is $120.7 million.
- Component 3 is the retirement income exemption beginning in tax year 2024. This would add around 294,000 returns that would be eligible for this exemption. The fiscal impact in FY 2024 is $79.8 million, FY 2025 is $266.8 million, and FY 2026 is $269.4 million.
- The Net Operating Loss extension is for tax years 2018 through 2020, The fiscal impact for FY 2024 is $8.4 million, FY 2025 is $8.4 million and would end thereafter. The bill would extend the deadline for eligible taxpayers to file amended returns for tax years 2018 through 2020 until April 15, 2025.
- The standard deduction cost of living increase begins with tax year 2023. The fiscal impact is estimated to be for FY 2024, $24.5 million; FY 2025 is $32.4 million; and for FY 2026 is $42.3 million.
- The Homestead Property Tax Refund is retroactive to tax year 2022 and is estimated that 31,000 additional households would qualify for the program. The fiscal impact is estimated for FY 2024 to be $12.9 million; FY 2025 is $13.2 million; and in FY 2026 is $17.9 million.
- The total for SB33 as amended by the Senate Committee of the whole for FY 2024 is $280.2 million, FY 2025 is $440.5 million, and for FY2026 is $451.4 million.
Proponents:
Mark Tomb, Kansas Association of Realtors, testified as a proponent for SB33 focusing on property relief in Section 3 of the bill. SB33 provides a income tax credit reducing the property tax burden of fixed income seniors and disabled veterans. The expansion includes increasing the household income threshold by excluding Social Security income and increasing the maximum appraised valuation of a participating home from $350,000 to $595,000. The property tax component of SB33 was highlighted and expanding the program really increases the likelihood that seniors and disabled veterans are not property taxed out of their homes. Mr. Tomb stood for questions from Committee members. (Attachment 2)
Hugh O'Reilly, Kansas Restaurant & Hospitality Association, testified as a proponent for SB33 stating we support this bill because it aligns Kansas policy more closely with federal policy. Kansas taxes the wages twice at the employer level because KDOR is disallowing the modification to restore the wage deduction, and at the employee level as the wages are taxable income to the employee. He noted this is inconsistent with other programs and deserves to be corrected to not cause additional liabilities within an industry that has been decimated by other government decisions. (Attachment 3) Mr. O'Reilly stood for questions from Committee members.
Glenda DuBoise, AARP, Kansas State Director, testified as a proponent for SB33 which would exempt all social security benefits from Kansas income tax. The legislation ensures more middle class retirees and their families can keep more of their hard-earned benefits. (Attachment 4) Ms. DuBoise stood for questions from Committee members.
Written testimony was submitted by the following as proponents for SB33.
Spencer Duncan, League of Municipalities, (Attachment 5)
Dave Trabert, Kansas Policy Institute, (Attachment 6)
Mike Kelly, Johnson County Board of County Commissioners, (Attachment 7)
Jim Cain, Kansas Citizen, (Attachment 8)
Opponents:
Donna Ginther, Professor of Economics, University of Kansas, testified as an opponent for SB33 that would eliminate taxes on retirement income and will reduce revenues for the State General Fund. She noted the tax cuts for seniors include eliminating all taxes on social security, exempts retirement income from taxation, includes changes to the Homestead Property Tax Refund and additional provisions in the bill is estimated to cost in FY 2025, $441. million. (Attachment 9) Ms. Ginther stood for questions from Committee members.
Emily Fetsch, Kansas Action for Children, testified as an opponent for SB33 noting the exemption of social security benefits from Kansas income tax would decrease state funding for programs that benefit seniors and other Kansans, while doing nothing to stimulate economic growth. (Attachment 10) Ms. Fetsch stood for questions from Committee members.
Chairperson Smith closed the hearing for SB33.
