SPECIAL SESSION OF 2024
SUPPLEMENTAL NOTE ON SENATE BILL NO. 1
As Recommended by Senate Committee of the
Whole
Brief*
SB 1 would make various changes to income, sales, and
property tax law. Specifically, the bill would:
●Restructure individual income tax brackets and
rates to provide for a two-bracket system;
●Exempt Social Security income from the individual
income tax;
●Increase the standard deduction and personal
exemption amounts;
●Reduce privilege tax rates;
●Abolish the Local Ad Valorem Tax Reduction Fund
and County and City Revenue Sharing Fund;
●Increase the amount of the appraised value of
residential property exempt from the statewide
uniform school finance levy;
●Increase the child and dependent care income tax
credit; and
Exclude Section 1031 exchange sales from being
considered valid sales for property valuation purposes.
____________________
*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 Brackets and Rates
The bill would restructure the Kansas individual income
tax brackets to a two-bracket system, beginning in tax year
2024. For married individuals filing jointly, taxable income of
$0 to $46,000 would be taxed at 5.2 percent, and taxable
income of $46,001 and above would be taxed at 5.58
percent.
For all other filers, taxable income of $0 to $23,000
would be taxed at 5.2 percent, and taxable income of $23,001
and above would be taxed at 5.58 percent.
Social Security Benefit Exemption
Beginning in tax year 2024, all Social Security benefits
would be exempt from Kansas income tax.
Standard Deduction and Personal Exemption Increases
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 beginning in tax year 2024.
The bill would also increase the personal exemption
allowance amount, currently set at $2,250 for all persons on
the return, to $18,320 for married couples filing joint returns,
$9,160 for all other filers, and an additional $2,320 for each
dependent listed on the return.
2- 1 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 2024 and all years
thereafter; and
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 all years thereafter.
[Note: The surtaxes on financial institutions would not be
affected by the bill.]
Local Government Transfers
The bill would abolish the Local Ad Valorem Tax
Reduction Fund and County and City Revenue Sharing Fund
and eliminate statutory transfers from the State General Fund
(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 $75,000 of appraised value.
The bill would discontinue the formula to increase the
amount of the exemption based upon the statewide average
increase in residential valuation over the preceding ten years.
The bill would require a demand transfer to be made
from the SGF to the School Finance Fund in the amount of
any reduction to the State School District Finance Fund
attributable to the residential exemption in excess of $42,049
3- 1 and the mill levy below 20 mills, as certified by the Director of
the Budget.
For 2024 only, dates in property tax cycles requiring
county clerks to notify taxing entities of certain taxable values
and revenue neutral rates would be delayed from June 15 to
July 1.
Tax Credit for Household and Dependent Care Expenses
The bill would increase the tax credit for household and
dependent care expenses from 25 percent to 50 percent of
the federally-allowed amount, effective tax year 2024.
Section 1031 Exchange Exclusion from Valid Sales
The bill would prohibit the sale price at which a property
sells in an Internal Revenue Code Section 1031 exchange
(1031 exchange) from being considered an indicator of fair
market value or used in arriving at fair market value for
property tax purposes. The bill would exclude such sales from
being considered valid sales for purposes of the sales ratio
study used for measuring tax appraisal accuracy.
[Note: A 1031 exchange allows a person to postpone
paying tax on the gain the person receives from selling a
property if they reinvest the proceeds in similar property as
part of a qualifying like-kind exchange.]
Background
The 2024 Legislature passed HB 2284, HB 2036, and
House Sub. for SB 37, all of which contained various tax
reform provisions. These bills were all vetoed and the vetoes
were not overridden.
4- 1 On June 14, 2024, the Governor issued a proclamation
calling the Legislature into special session, beginning June
18, 2024, “to pass sustainable, comprehensive tax relief.”
The Speaker of the House of Representatives and the
President of the Senate, pursuant to authority granted by the
Legislative Coordinating Council, authorized a joint
informational hearing of the House Committee on Taxation
and the Senate Committee on Assessment and Taxation to
review a tax proposal for the special session. The hearing
was held on June 17, 2024, and included information on a
draft bill providing for tax reform.
Fiscal Information
According to the Department of Revenue, the tax
provisions of the bill are estimated to have the following fiscal
effects:
(Dollars in Millions)
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029
Income Tax Brackets &
Rates, Std Ded, Pers Ex
(253.4)(197.0)(198.9)(200.9)(202.9)
Social Security
Exemption
(152.1)(120.7)(124.4)(128.1)(131.9)
Privilege Tax Reductions(4.8)(3.7)(3.7)(3.7)(3.7)
Res. Property Tax
Exempt to $75,000
(55.3)(51.5)(47.5)(43.2)(38.6)
Child Care Tax Credit to
50%
(6.0)(6.0)(6.0)(6.0)(6.0)
Total Impact (471.6)(378.9)(380.5)(381.9)(383.1)
Additionally, the provision excluding Section 1031
exchange transactions from valid sales would have an
indeterminate fiscal effect on state and local property taxes.
5- 1 The bill would also provide for annual transfers from the
SGF to the State School District Finance Fund. These
transfers would reduce the SGF school finance appropriation
obligations and would have no net effect on the SGF.
Taxation; income tax; property tax; credits; Social Security benefits; standard
deduction; privilege tax; residential exemption; Local Ad Valorem Tax Reduction
Fund; child and dependent care tax credit; 1031 exchanges
6- 1