SESSION OF 2024
SUPPLEMENTAL NOTE ON SENATE BILL NO. 539
As Amended by Senate Committee on
Assessment and Taxation
Brief*
SB 539, as amended, would make various changes to
income and property tax law. Specifically, the bill would:
●Replace individual income tax brackets with a
single rate;
●Exempt Social Security income from the individual
income tax;
●Increase the personal exemption amounts;
●Increase the standard deduction amount for single
filers;
●Provide for annual personal exemption amount and
standard deduction increases by a cost-of-living
adjustment;
●Reduce privilege tax rates; and
●Increase the amount of the appraised value of
residential property exempt from the statewide
uniform 20-mill school finance levy to $80,000.
The bill would be in effect upon publication in the
Kansas Register.
____________________
*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 Single Rate
The bill would provide for a single individual income tax
rate to be set at:
●5.7 percent in tax year 2024;
●5.65 percent in tax year 2025;
●5.6 percent in tax year 2026;
●5.55 percent in tax year 2027;
●5.5 percent in tax year 2028; and
●5.45 percent in tax year 2029 and all future tax
years.
The bill would eliminate a provision that eliminates any
tax owed for single filers with taxable income less than
$2,500 and married couples filing joint returns with taxable
income less than $5,000.
Personal Exemption Amount Increase
The bill would increase the personal exemption
allowance amount, currently set at $2,250 for all persons on
the return, to $22,000 for married couples filing joint returns,
$11,000 for all other filers, and an additional $3,000 for each
dependent listed on the return.
Social Security Benefit Exemption
Beginning in tax year 2024, the bill would exempt all
Social Security benefits from the individual income tax.
2- 539 Standard Deduction Single Filer Increase
The bill would, beginning in tax year 2024, increase the
Kansas individual income tax standard deduction amount for
single filers from $3,500 to $4,000.
Cost-of-Living Adjustments
The bill would, beginning in tax year 2025, provide for all
Kansas individual income tax standard deduction amounts
and personal exemption allowance amounts to be annually
increased by the cost-of-living adjustment determined under
Section 1(f)(3) of the Internal Revenue Code.
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 1.94 percent for tax year 2025, and 1.63
percent for tax year 2026 and all tax years thereafter.
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 2025 and 1.61 percent for tax year
2026 and all years thereafter.
[Note: The surtaxes on financial institutions would not be
affected by the bill.]
School Finance Levy Residential Exemption
The bill would increase, beginning in tax year 2024, the
amount of residential property exempt from the statewide
uniform 20-mill 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 take effect in
2025.
3- 539 The bill would also make technical changes.
Background
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by Representative Awerkamp, a representative
of Americans for Tax Reform, and two private citizens. The
proponents generally stated the bill would provide broad tax
relief to Kansans, single-rate tax systems are easier for
taxpayers to understand, and the bill is responsive to
criticisms of previous tax plans.
Written-only proponent testimony was provided by
representatives of Kansas Association of Realtors, Kansas
Bankers Association, Kansas Chamber, Kansas Policy
Institute, and National Federation of Independent Business –
Kansas.
Written-only opponent testimony was provided by
representatives of Kansas Action for Children, Kansas
National Education Association, Tax Simple Center, and Voter
Rights Network of Wyandotte County, and a private citizen.
No other testimony was provided.
The Senate Committee amended the bill to provide for
the full exemption of Social Security benefits and to remove a
provision that would accelerate the final reduction of the state
sales tax rate on food and food ingredients.
4- 539 Fiscal Information
According to the Department of Revenue, the bill, as
amended, would have the following fiscal effect:
(Dollars in Millions)
FY 2025 FY 2026 FY 2027
Income Tax Single Bracket, Std
Ded, Pers Ex $(244.9)$(271.0)$(349.6)
Social Security Exemption (152.1) (120.7) (124.4)
Privilege Tax Rate Reductions (6.8) (7.4) (7.5)
Subtotal State General Fund (403.8)(399.10)(481.50)
Res. Property Tax Exemption
Increases (62.10) (65.60) (69.20)
Subtotal All Other State Funds(62.10) (65.60) (69.20)
Total All Funds $(465.9)$(464.7)$(550.7)
99.0 99.0 99.0
Note: Totals may not add due to rounding.
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; rates; personal exemption; standard deduction; Social Security
benefits; indexing; property tax; residential exemption
5- 539