SESSION OF 2023
SECOND CONFERENCE COMMITTEE REPORT BRIEF
SENATE BILL NO. 169
As Agreed to April 5, 2023
Brief*
SB 169 would make various changes to income, sales, and property tax law. Specifically,
the bill would:
●Replace individual income tax brackets with a single rate of 5.15 percent;
●Reduce corporation income and privilege tax rates and discontinue corporate rate
reductions required by the Attracting Powerful Economic Expansion Act (APEX);
●Expand the exemption on Social Security income;
●Provide for annual standard deduction increases by a cost-of-living adjustment;
●Accelerate the elimination of state sales and compensating use tax on food and food
ingredients and the associated repeal of the food sales tax credit and disposition of
revenue changes; and
●Increase the amount of the appraised value of residential property exempt from the
statewide uniform 20 mill school finance levy to $60,000.
Individual Income Tax Flat Rate
The bill would provide, beginning in tax year 2024, for a single individual income tax rate of
5.15 percent to be applied to all Kansas taxable income in excess of $12,300 for married
individuals filing joint returns and $6,150 for all other individuals. Kansas taxable income less
than those amounts would not be taxed.
Corporation Income and Financial Institutions Privilege Tax Rate Changes
The bill would reduce the tax rates applied to corporations and financial institutions.
For corporations, the normal tax rate would be set at 3.0 percent beginning in tax year
2024. [Note: The normal corporate rate is currently scheduled to be reduced from 4.0 to 3.5
percent in tax year 2024 due to an agreement under APEX.]
For banks, the normal tax rate would be reduced from 2.25 percent to 1.94 percent for tax
year 2024 and to 1.63 percent for tax year 2025 and all years thereafter.
____________________
*Conference committee report briefs are prepared by the Legislative Research Department and do not express
legislative intent. No summary is prepared when the report is an agreement to disagree. Conference committee
report briefs may be accessed on the Internet at http://www.kslegislature.org/klrd
1 - 169 For trust companies and savings and loan associations, the normal tax rate would be
reduced from 2.25 percent to 1.93 percent for tax year 2024 and to 1.61 percent for tax year
2025 and all years thereafter.
[Note: The surtaxes on corporations and financial institutions would not be affected by the
bill.]
The bill would repeal possible future corporate rate decreases resulting from agreements
under APEX.
Social Security Benefit Income Taxation Cliff Phase Out
Beginning in tax year 2023, the bill would expand the existing income tax exemption for
federally taxable Social Security benefits available to taxpayers with $75,000 or less in federal
adjusted gross income (FAGI) to phase out taxpayer eligibility for the exemption through a linear
transition formula from $75,000 in FAGI to $100,000 in FAGI.
The bill would provide for annual increases of $5,000 to the upper bound of the transition
beginning in tax year 2024.
Standard Deduction Increase and Cost of Living Adjustment
The bill would, beginning in tax year 2024, provide for all Kansas individual income tax
standard deduction amounts to be annually increased by the cost-of-living adjustment
determined under Section 1(f)(3) of the Internal Revenue Code.
Food Sales Tax Changes
The bill would accelerate the elimination of the state sales and compensating use tax rate
on food and food ingredients to January 1, 2024.
The bill would raise the percentage of sales tax revenue distributed to the State Highway
Fund to 18.0 percent of sales and use tax receipts beginning January 1, 2024.
The bill would sunset the food sales tax credit at the end of tax year 2023.
[Note: Under current law, the rate is scheduled to be reduced to 2.0 percent on January 1,
2024, and to 0.0 percent on January 1, 2025; the proportion of sales and use tax receipts
distributed to the State Highway Fund is scheduled to be increased to 18.0 percent beginning
January 1, 2025; and the credit is scheduled to be sunset after tax year 2024.]
School Finance Levy Residential Exemption
The bill would increase, beginning in tax year 2023, the amount of residential property
exempt from the statewide uniform 20 mill school finance levy from $40,000 to $60,000 of
appraised value.
A formula to increase the amount of the exemption based upon the statewide average
increase in residential valuation over the preceding ten years would be delayed in
implementation from tax year 2023 to 2024.
2 - 169 Conference Committee Action
The Second Conference Committee agreed to the provisions of House Sub. for SB 169
and further amended the bill as follows:
●Provide for a single individual income tax rate of 5.15 percent;
●Provide for a portion of the privilege tax rate reduction to occur in tax year 2024;
●Provide for an annual increase in the upper bound of exempt Social Security income;
●Eliminate the standard deduction increase for taxpayers filing single returns;
●Eliminate state sales and compensating use tax on food and food ingredients on
January 1, 2024, and repeal the food sales tax credit beginning in tax year 2024;
●Set the amount of the appraised value of residential property exempt from the
statewide uniform 20 mill school finance levy at $60,000; and
●Change the effective date of the bill to publication in the statute book.
Background
SB 169 was introduced by the Senate Committee on Assessment and Taxation at the
request of Senator Tyson. The bill, as introduced, would have provided for a single individual
income tax rate of 4.75 percent, beginning in tax year 2024. The House Committee on Taxation
removed the contents of SB 169 and inserted the contents of HB 2457. The House Committee
recommended a substitute bill with additional amendments to the contents of HB 2457 as
introduced:
●Replace the phase-out of all Social Security income from taxation with a provision to
smooth out the cliff from $75,000 to $100,000 [Note: The Second Conference
Committee retained this amendment, with a subsequent addition of an annual
increase of the upper bound.];
●Increase the flat tax rate to 5.25 percent and raise minimum taxable income levels
[Note: The Second Conference Committee modified this amendment.];
●Delay implementation of reductions to corporate income and privilege taxes to tax
year 2024 [Note: The Second Conference Committee modified this amendment.]; and
●Change the effective date of the bill to publication in the Kansas Register. [Note: The
Second Conference Committee did not retain this amendment.]
HB 2457
HB 2457 was introduced by the House Committee on Taxation at the request of
Representative Adam Smith.
3 - 169 House Committee on Taxation
In the House Committee hearing, proponent testimony was provided by representatives of
Americans for Prosperity-Kansas, the Kansas Bankers Association, and the Kansas Chamber.
The proponents generally stated the bill would provide needed tax relief to Kansans and Kansas
businesses, make the Kansas more competitive and contribute to economic growth, and help
the state retain residents.
Written-only proponent testimony was provided by representatives of the Kansas
Association of Realtors and Kansas Policy Institute.
Opponent testimony was provided by an economics professor of the University of Kansas
and by representatives of Kansas Action for Children and the Kansas National Education
Association. The opponents generally stated the bill would substantially reduce state revenues
available to provide services to Kansans and would disproportionally benefit wealthy taxpayers.
Written-only opponent testimony was provided by a private citizen and representatives of
The Family Conservancy, Kansas Appleseed, Kansas Interfaith Action, and REACH Healthcare
Foundation.
Neutral testimony was provided by a representative of the Kansas League of
Municipalities.
House Committee of the Whole
The House Committee of the Whole made a technical amendment and amended the bill to:
●Increase the amount of residential property exempt from the statewide uniform 20 mill
school finance levy to $80,000 of appraised value; and
●Allow taxpayers to elect the tax year in which contributions to postsecondary
education savings accounts are claimed.
[Note: The Second Conference Committee did not retain these amendments.]
4 - 169 Fiscal Information
The Department of Revenue indicates SB 169, as agreed to by the Second Conference
Committee, is estimated to have the following fiscal effects:
(Dollars in Millions)
FY 2024FY 2025FY 2026
Individual Income Tax Single Bracket
5.15%
$(99.2) $(331.7) $(335.0)
Corporate Rate Reductions (12.1) (40.6) (41.4)
Privilege Tax Rate Reductions (5.8) (7.2) (7.4)
Social Security Exemption Linear
Transition and Annual Adjustment
(22.3) (21.9) -26
Standard Deduction Indexing (3.8) (15.8) (25.1)
Food Sales Tax to 0.0% Acceleration (115.5) (122.7) -
Food Sales Tax Credit Repeal Acceleration - 10.3 -
Subtotal – State General Fund $(258.7) $(529.6) $(434.9)
Food Sales Tax to 0.0% Acceleration$(3.0) $ 3.6 $ -
Subtotal – State Highway Fund $(3.0) $ 3.6 $ -
Res. Property Tax Exempt. to $60,000 $(41.0) $(43.3) $(45.9)
Subtotal – State School District
Finance Fund
$(41.0) $(43.3) $(45.9)
Total All Funds $(302.7) $(569.3) $(480.8)
The Department of Revenue also indicated the bill has the potential to reduce revenues
pledged to repay STAR bond projects by unknown amounts beginning in FY 2025, and the
reduction in property tax revenue would require a corresponding appropriation for State
Foundation Aid from the State General Fund in order to maintain Base Aid for Student
Excellence in the school finance formula at $5,103 for FY 2024, as included in The FY 2024
Governor’s Budget Report.
The fiscal effect associated with enactment of the Social Security income taxation phase
out, food sales tax rate reduction, and sales tax revenue distribution change provisions of the
bill are partially reflected in The FY 2024 Governor’s Budget Report.
Taxation; income tax; brackets; privilege tax; surtax; rates; Social Security benefits; phase out; sales tax; food sales tax; food sales
tax credit; State Highway Fund; property tax; mill levies; school finance; exemption
ccrb_sb169_02_04058pm.odt
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