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Minutes for SB169 - Committee on Taxation
Short Title
Providing an income tax rate of 4.75% for individuals.
Minutes Content for Thu, Mar 23, 2023
Chairperson Smith made a motion, seconded by Representative Eplee, to remove the contents of SB169 and insert the contents of HB2457. Motion passed.
Chairperson Smith stated SB169 was the Senate's single rate tax plan at 4.75 percent.
Adam Siebers, Revisor, provided an overview on the contents of HB2457 that will make changes to the income tax, privilege, sales tax and property tax provisions. Commencing tax year 2024 for individuals, single tax rate of 4.95 percent of the Kansas taxable income that is in excess of $11,250 for married individuals filing joint returns; and $5,624 for all other individuals. Commencing in tax year 2023 for corporations, the normal tax is decreased from 4.0 percent to 3.0 percent. Potential decreases from prior APEX legislation are discontinued.
Social Security provisions of HB2109 expanding the subtraction modification for social security income and providing that all social security income would be allowed pursuant to the subtraction modification commencing in tax year 2026.
The standard deduction commencing in tax year 2023 for individual tax filers is increased from $3,500 to $4,000. Commencing in tax year 2024, all standard deduction amounts would be increased by the cost-of-living adjustment.
The income tax credit for purchases of food in this state is discontinued commencing in tax year 2023.
The privilege tax for national banking associations and state banks is decreased for the normal tax from 2.25 percent to 1.625 percent commencing in tax year 2023. The privilege tax for trust companies and savings and loan associations is decreased for the normal tax from 2.25 percent to 1.61 percent commending in tax year 2023.
The state rate of sales and compensating use tax for sales of food and food ingredients is decreased from 4.0 percent to 0.0 percent commencing July 1, 2023. The percentage of revenue transferred to the State Highway Fund from sales and compensating use taxes is increased from 17.0 percent to 18.0 percent commencing July 1, 2023.
The current $40,000 exemption from the 20 mills is increased to $65,000 for tax year 2023.
Mr. Siebers stood for questions from Committee members.
Chairperson Smith stated before the Committee opens the bill for discussion and amendments, Edward Penner, Legislative Research has done some work with the fiscal note and the Committee will do a real-time estimate as amendments are presented. The fiscal note on the original bill is much higher than anticipated. Chairman Smith spoke with the Chairman of House Appropriations regarding what is the budget for tax cuts and how much revenue reduction can be sustained looking at this year and four to five years out. The amount provided was $500 million and Chairman Smith noted he would want to keep the final amount lower than $500 million. Chairman Smith stated the $500 million would include bills that have been passed out of House Taxation this session and becomes part of the total aggregate amount that we are cutting revenue.
Edward Penner, Legislative Research, provided an overview of the table for the fiscal note which is broken down into the three following parts: (Attachment 1)
- First part are the bills that have passed to the House with a state fiscal impact.
- Second part are the bills that have passed out of committee and currently sitting on House General Orders.
- Third part is the bill the Committee will be working on today.
Based on Committee action today, the total amount on the table will be updated to reflect $500 million and below for the total revenue reduction. Mr. Penner noted this table only includes bills that have specific fiscal impacts for the state, bills that have either no impact or local only impact, and bills that are negligible or have a indeterminate impact are not displayed on the list.
Mr Penner stood for questions from Committee members.
Representative Sawyer moved, seconded by Representative Clayton, to amend HB2457. (Attachment 2).
Committee discussion ensued.
Representative Sawyer stated once the the amendment is fully implemented it will save the state around $100 million a year.
Representative Sawyer closed on his amendment for HB2457. Motion passed.
Representative Francis moved, seconded by Representative Eplee, to amend HB2457.(Attachment 3)
Representative Francis stated the original bill had the flat tax set at 4.95 percent and this amendment changes the rate to 5.25 percent. Taxable income starts at $12,300 for married individuals and $6,150 for single individuals. Under current law the individual starts paying taxes at $8,250 and under this amendment the individual doesn't start paying taxes at $12,400. Under current law married with two kids, the individual starts paying taxes at $22,000 and under this amendment the individual doesn't start paying income taxes until $29,300.
Committee discussion ensued.
Representative Francis closed on his amendment for HB2457. Motion passed.
Chairperson Smith moved, seconded by Representative Helgerson, to amend HB2457. (Attachment 4)
Chairperson Smith stated the amendment takes the corporate and banking association that are the accelerated APEX provisions.
The grand total for all bills is FY 2024, $486.0 million; FY 2025, $564.0 million; and FY2026, $473.4 million.
Chairperson Smith closed on his amendment for HB2457. Motion passed.
Chairperson Smith made a conceptual motion for HB2457, seconded by Representative Helgerson, to make effective upon publication of the Kansas Register.
Committee discussion ensued.
Chairperson Smith closed on his conceptual motion for HB2457. Motion passed.
Representative Hoheisel moved, seconded by Representative Eplee, the Committee recommend House Substitute for SB169 favorable for passage as amended. Motion passed.
