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Focus on State and Local Taxation: Kansas Tax Package Passes with Retroactive Provisions

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Recently passed legislation now subjects business owners and owners of rental property to tax in Kansas. During the 2017 legislative session, SB 30 was passed, vetoed by Governor Brownback and quickly overridden by the Kansas Legislature. The bill becomes law July 1, 2017 but several provisions are effective January 1, 2017.
June 12, 2017

Recently passed legislation now subjects business owners and owners of rental property to tax in Kansas. During the 2017 legislative session, SB 30 was passed, vetoed by Governor Brownback and quickly overridden by the Kansas Legislature. The bill becomes law July 1, 2017 but several provisions are effective January 1, 2017.

Among those effective January 1, 2017, the non-wage business income tax exemption was removed. This includes S Corporation business income, all partnership business income (except guaranteed payments), Schedule C (sole proprietorship) income, rental income and farm income.

Itemized deductions for 2017 remain the same as prior year with 100% charitable contributions allowed and 50% medical expenses, mortgage interest and property taxes. This will increase to 75% in 2019 and 100% in 2020.

Individual rate increases will be phased in using a three-bracket system for 2017 and 2018. The increased rates are retroactive to January 1, 2017 but the bill includes language that no penalties and interest arising from the underpayment of taxes due to the rate changes will be assessed as long as the underpayment is rectified on or before April 17, 2018.

The full text of this legislation can be found here.

Please contact one of RubinBrown’s State and Local Tax professionals today to assist you in understanding the impact that this law change may have on you and your business.

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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