SESSION OF 2024
SUPPLEMENTAL NOTE ON SENATE BILL NO. 539
As Amended by Senate Committee of the Whole
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;
●Create a child tax credit;
●Reduce privilege tax rates;
●Accelerate the elimination of state sales and
compensating use tax on food and food ingredients
and the associated 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 $100,000.
____________________
*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 The bill would be in effect upon publication in the
Kansas Register.
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.
Child Tax Credit
The bill would, beginning in tax year 2024, create an
income tax credit for qualifying children of taxpayers.
The credit per qualifying child, which would be
refundable, would be:
●$600 for taxpayers with Kansas adjusted gross
income from $0 to $25,000;
●$400 for taxpayers with Kansas adjusted gross
income above $25,000 but not over $50,000;
●$200 for taxpayers with Kansas adjusted gross
income above $50,000 but not over $75,000;
●$100 for taxpayers with Kansas adjusted gross
income above $75,000 but not over $100,000;
●$75 for taxpayers with Kansas adjusted gross
income above $100,000 but not over $200,000;
●$50 for taxpayers with Kansas adjusted gross
income above $200,000 but not over $350,000;
and
3- 539 ●$25 for taxpayers with Kansas adjusted gross
income over $350,000.
Beginning in tax year 2025, the credit amounts and
threshold income amounts would be adjusted by the cost-of-
living adjustment determined under Section 1(f)(3) of the
Internal Revenue Code.
A child would generally only be permitted to be claimed
by one taxpayer per year. However, married taxpayers filing
separate returns would be entitled to claim one-half of the
credit amount that would have been claimed on a joint return.
In order to qualify for the credit, a child would have to be
under 5 years old at the end of the tax year, reside at the
same place as the taxpayer for more than one-half of the tax
year, and be the child of the taxpayer or a descendant of such
child, a sibling or stepsibling of the taxpayer, or a descendant
of such sibling or stepsibling.
The Secretary of Revenue would be required to annually
report on the adjusted amounts of the credit, the utilization of
the credit, and information required to evaluate the
effectiveness of the credit by January 31 of each year. The
report would be delivered in writing to the House Committee
on Taxation and the Senate Committee on Assessment and
Taxation.
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.
4- 539 [Note: The surtaxes on financial institutions would not be
affected by the bill.]
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 July 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 July 1, 2024.
[Note: Under current law, the rate is scheduled to be
reduced to 0.0 percent on January 1, 2025, and 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.]
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 $100,000 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.
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.
5- 539 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.
Senate Committee of the Whole
On March 14, 2024, the Senate Committee of the Whole
amended the bill to:
●Add a child tax credit;
●Accelerate the elimination of state sales and
compensating use tax on food and food ingredients
and the associated disposition of revenue changes;
and
6- 539 ●Increase the amount of the appraised value of
residential property exempt from the statewide
uniform 20-mill school finance levy to $100,000.
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
FY
2028
FY
2029
Income Tax Single
Bracket, Std Ded,
Pers Ex $(244.9)$(271.0)$(349.6)$(429.4)$(511.0)
Social Security
Exemption (152.1)(120.7)(124.4)(128.1)(131.9)
Privilege Tax Rate
Reductions (1.3) (4.2) (7.4)(7.4) (7.4)
Child Tax Credit (59.3)(46.1)(46.6)(47.1)(47.50)
Food Sales Tax to
0.0% Acceleration (62.2) - - - -
Subtotal State
General Fund (519.8)(442.0)(528.0)(612.3)(697.8)
Food Sales Tax to
0.0% Acceleration (12.9) - - - -
Subtotal State
Highway Fund (12.9) - - - -
Res. Property Tax
Exempt to $100,000 (84.8)(89.5)(94.3)(99.5)(104.9)
Subtotal All Other
State Funds (84.8)(89.5)(94.3)(99.5)(104.9)
Total All Funds$(617.5)$(531.5)$(622.3)$(711.8)$(802.7)
The fiscal effects associated with the Social Security
income taxation exemption, standard deduction increases,
privilege tax rate changes, food sales tax, 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; child tax credit; sales tax; food
sales tax
7- 539