Kansas House steers away from ‘flat tax’ with new bill

TOPEKA, Kan. (KSNT) – Kansas House Republicans are steering away from the GOP-led push for a “flat tax.” Republican leaders announced a new tax reform plan introduced on Tuesday.

“We all wanted a single rate because it’s truly the best policy for Kansans long term, but the votes weren’t quite there for an override,” House Speaker Dan Hawkins said in a statement to the Nexstar Kansas Capitol Bureau. “Inflation is wrecking folks’ budgets, so it’s crucial we get tax relief done this year for the people of Kansas. We’re working on a different plan that still provides critical property tax relief, Social Security relief, and a tax break to all income tax filers.”

Republicans failed to revive their “flat tax” plan earlier this year. Now, House Republicans are looking at other options.

The proposal, House Bill 2844, would make changes to each of the state’s current income tax brackets, effectively moving it to a two-rate system.

“We’re reducing… making a small reduction in the rate… we’re removing the first bracket that we currently have in the tax code… so, you will have a taxable income at 0% in that first bracket,” House Tax Committee Chair Adam Smith, R-Weskan said.

Currently, the state has three income tax brackets. Individuals making between about $2,500 to $15,000 are taxed at 3.1%. People making between $15,000 to $30,000 are taxed at 5.25%, and anything over that is taxed at 5.7%.

In addition to getting rid of the 3.1% tax bracket, Smith said the new bill would reduce the 5.25% bracket to 5.2%, and the 5.7% bracket would decrease to 5.65%. It would also increase the standard deduction and the Kansas personal exemption. Changes for individual filers and married people filing jointly can be found on pages 14 and 15 of the bill.

The proposal would also address property taxes and social security income. It would also abolish the Local Ad Valorem Tax Reduction Fund (LAVTRF), despite calls from local officials to replenish the fund this year.

This comes after the Senate passed their new ‘flat tax’ bill last week. The proposal, Senate Bill 539, would gradually decrease the state income tax. The Senate bill would also include increases in the Kansas personal exemption and standard deduction. However, it would maintain the single-rate income tax, which has received backlash from Democrats. It would set the state income tax to 5.7% for tax year 2024, then it would finally reach 5.45% in tax year 2029.

Rep. Smith said the House is planning on fast-tracking House Bill 2844, which means the contents could be substituted into another bill that’s already passed the Senate. This would mean that the Senate would only have to take it up for a concurrence vote, if the bill passes the House.

House Bill 2844 is set for a committee hearing Wednesday at 3:30 p.m.

To track the bill, click here.