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Focus on State and Local Taxation: Kansas Tax Changes

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Kansas lawmakers have enacted broad tax law changes to balance the state’s $400 million budget shortfall.  Below is a summary of the tax plan passed, which passed in two different bills, H.B. 2109 and S.B. 270, effective July 1, 2015 and applicable as noted.
June 24, 2015

Kansas lawmakers have enacted broad tax law changes to balance the state’s $400 million budget shortfall. Below is a summary of the tax plan passed, which passed in two different bills, H.B. 2109 and S.B. 270, effective July 1, 2015 and applicable as noted.

  • Sales tax increase from 6.1% to 6.5% effective July 1, 2015;
  • Taxing guaranteed payments for pass through entities retroactive to January 1, 2015;
  • Income tax rates freeze at 2.7% for the bottom rate and 4.6% for the top rate until tax year 2018. In 2018, the bottom rate drops to 2.6% and the top rate drops to 4.6%. The rates remain in effect in the future unless changed by a formula that begins in 2019 (certain general fund revenues increase more than 2.5% over the previous year, the formula lowers the income tax rate. KPERS spending is not subject to the formula);
  • Acceleration of deduction phase down and repeal of income tax deductions, repealing all deductions except for the mortgage interest deduction which could be claimed at 50% and the charitable deduction which could be claim at 100%, and a property tax deduction equal to 50% of the federal deduction, retroactive to January 1, 2015;
  • The cigarette tax increases by 50 cents a pack;
  • Exemption of certain low income Kansans from income tax is included (Joint filers making less than $12,500 or less would pay nothing);
  • The food sales tax rebate program eliminated in 2012 is restored;
  • Individual development account tax credits, discontinued beginning in tax year 2013, are resumed
  • Tax amnesty for state taxes authorized from September 1, 2015 to October 15, 2015;
  • Requiring SSN for claiming tax credits; and
  • Rural Opportunity Zone sunset extension for 5 years through taxable years beginning before January 1, 2022.

If Kansas taxes raise concerns or uncertainties, the State and Local Tax (SALT) professionals at RubinBrown can assist you in resolving those concerns. We are available to provide a detailed consultation regarding the application of these tax changes to 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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