SESSION OF 2024
SUPPLEMENTAL NOTE ON HOUSE SUBSTITUTE FOR
SENATE BILL NO. 300
As Recommended by House Committee on
Taxation
Brief*
House Sub. for SB 300 would make various changes to
income, sales, and property tax law. Specifically, the bill
would:
●Restructure individual income tax brackets with
reduced tax rates;
●Phase out the individual income taxation of Social
Security benefits;
●Increase the standard deduction and personal
exemption amounts and provide for future
increases by a cost-of-living adjustment;
●Reduce privilege tax rates;
●Reinstate the transfer from the State General Fund
(SGF) to the Special City and County Highway
Fund and abolish the Local Ad Valorem Tax
Reduction Fund and County and City Revenue
Sharing Fund; and
●Increase the amount of the appraised value of
residential property exempt from the statewide
uniform school finance levy and reduce the mill
levy.
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org Individual Income Tax Brackets and Rates
The bill would restructure the Kansas individual income
tax brackets, beginning in tax year 2024. For married
individuals filing jointly, taxable income of $0 to $14,000
would be taxed at 0.0 percent, taxable income from $14,001
to $60,000 would be taxed at 5.2 percent, and taxable income
of $60,001 and above would be taxed at 5.65 percent.
For all other filers, taxable income of $0 to $7,000 would
be taxed at 0.0 percent, taxable income from $7,001 to
$30,000 would be taxed at 5.2 percent, and taxable income of
$30,001 and above would be taxed at 5.65 percent.
Social Security Benefit Taxation Phase Out
For tax year 2024, the bill would expand the existing
income tax exemption for federally taxable Social Security
benefits available to taxpayers with $75,000 or less federal
adjusted gross income (FAGI) to phase out taxpayer eligibility
for the exemption through a linear transition formula from
$75,000 in FAGI to $125,000 in FAGI.
For tax year 2025, the phase out of eligibility for the
exemption would be extended to $175,000 in FAGI.
For tax year 2026, the phase out of eligibility for the
exemption would be extended to $275,000 in FAGI.
For tax year 2027 and all years thereafter, all Social
Security benefits would be exempt from Kansas income tax.
Standard Deduction and Personal Exemption Amounts
Increase and Cost-of-living Adjustments
The bill would increase the standard deduction amounts
from $3,500 to $3,605 for single filing status, $8,000 to
$8,240 for married filing status, and $6,000 to $6,180 for
head of household filing status for tax year 2024. These
2- 300 amounts would be further increased by the cost-of-living
adjustment determined under Section 1(f)(3) of the Internal
Revenue Code for tax years 2025 and 2026.
The bill would increase the personal exemption amount
from $2,250 to $2,320 in tax year 2024 and provide for
personal exemption amounts to be increased by the cost-of-
living adjustment determined under Section 1(f)(3) of the
Internal Revenue Code for tax years 2025 and 2026.
The increase and cost-of-living adjustments to the
personal exemption amounts would also apply to the
additional personal exemption amount for veterans who are
100.0 percent permanently disabled.
Financial Institutions Privilege Tax Rate Changes
The bill would reduce the privilege tax rates applied to
financial institutions:
●For banks, the normal tax rate would be reduced
from 2.25 percent to 1.63 percent for tax year 2025
and all years thereafter.
●For trust companies and savings and loan
associations, the normal tax rate would be reduced
from 2.25 percent to 1.61 percent for tax year 2025
and all years thereafter.
[Note: The surtaxes on financial institutions would not be
affected by the bill.]
Local Government Transfers
The bill would reinstate, effective for fiscal year 2025,
the transfer from the SGF to the Special City and County
Highway Fund based on the SGF receipts from motor carrier
property taxes and commercial vehicle fees. [Note: This
transfer is scheduled to resume in FY 2026 under current
law.]
3- 300 The bill would abolish the Local Ad Valorem Tax
Reduction Fund and County and City Revenue Sharing Fund
and eliminate statutory transfers from the SGF to these funds.
School Finance Levy Residential Exemption
The bill would increase, beginning in tax year 2024, the
amount of residential property exempt from the statewide
uniform school finance levy to $80,000 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 again take
effect in 2025.
The bill would reduce the uniform school finance levy
from 20 mills to 18 mills in tax year 2024.
Background
The bill was introduced by the Senate Committee on
Taxation at the request of Senator Blasi and, as introduced,
concerned privilege tax rates. The House Committee on
Taxation removed the contents of the bill and inserted the
amended contents of HB 2844, the background of which
follows below.
HB 2844
HB 2844 was introduced by the House Committee on
Taxation at the request of Representative A. Smith.
House Committee on Taxation
In the House Committee hearing, proponent testimony
was provided by representatives of the Kansas Chamber,
Kansas Farm Bureau, Kansas Livestock Association, and
Kansas Policy Institute. The proponents generally stated the
4- 300 bill would provided broad-based tax relief and represented a
compromise of various other tax plans.
Written-only proponent testimony was provided by
representatives of Kansas Association of Realtors, Kansas
Bankers Association, and National Federation of Independent
Business-Kansas.
Neutral testimony was provided by representatives of
the Institute for Policy and Social Research at the University
of Kansas and the Kansas National Education Association.
Written-only neutral testimony was provided by
representatives of the Kansas Association of Counties and
Kansas Association of School Boards.
No other testimony was provided.
The House Committee amended the bill to insert the
provision reinstating the transfer to the Special City and
County Highway Fund.
Fiscal Information
According to the Department of Revenue, the tax
provisions of the substitute bill are estimated to have the
following fiscal effects:
5- 300 (Dollars in Millions)
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029
Income Tax Rates, Std
Ded, Pers Ex $(211.5)$(177.2)$(187.5)$(189.3)$(191.2)
Social Security Phase
Out (50.9)(65.4)(96.2)(128.1)(131.9)
Privilege Tax
Reductions (2.6)(7.4)(7.4)(7.4)(7.4)
Subtotal State
General Fund (265.0)(250.0)(291.1)(324.8)(330.5)
Res. Property Tax Ex
and Mill Levy (147.0)(154.1)(161.6)(169.4)(177.7)
Subtotal All Other
State Funds (147.0)(154.1)(161.6)(169.4)(177.7)
Total All Funds$(412.0)$(404.1)$(452.7)$(494.2)$(508.2)
Additionally, the reinstatement of the transfer to the
Special City and County Highway Fund would increase SGF
expenditures by approximately $11.5 million in FY 2025.
[Note: Statute provides for this transfer to be a demand
transfer, which is recorded as an expenditure from the SGF.]
According to the fiscal note prepared by the Division of
the Budget on HB 2844, as introduced, the elimination of
transfers to the Local Ad Valorem Tax Reduction Fund and
the County and City Revenue Sharing Fund would increase
SGF revenues by approximately $156.0 million in FY 2026
and $158.0 million in FY 2027, as these transfers are
currently scheduled to resume beginning in FY 2026.
The fiscal effects associated with the Social Security
income taxation exemption, standard deduction increases,
privilege tax rate changes, and school finance levy residential
exemption increases are partially reflected in The FY 2025
Governor’s Budget Report.
Taxation; income tax; property tax; rates; brackets; Social Security benefits; standard
deduction; personal exemption; privilege tax; residential exemption; mill levy; Special
City and County Highway Fund; Local Ad Valorem Tax Reduction Fund
6- 300