House Tax Plan Published with Hearings Set for February 15 & 16

Kansas House leadership introduced its income tax reduction proposal on February 10 and published the bill on February 14. Moving quickly, hearings on the bill are scheduled for February 15 and 16. Highlights of the bill are a phased in reduction in income tax rates and exemption of non-wage business tax, scaling back of Earned Income Tax Credit in 2014, and partial sunset of sales tax.

To review the entire House Tax Plan, HB 2747, click here. The bill is scheduled for hearings on February 15 and 16.  

House Tax Plan - A Summary from Marlee Carpenter

House Leadership introduced its income tax reduction proposal on Friday and it takes at least $159.6 million dollars from transportation to help finance an income tax cut.

Tax Brackets:

The House plan, which has been in the works for several weeks, contains for Tax Year 2013 the existing three brackets with (for joint filers) incomes less than $30,000 taxed at 3.34% (from the current 3.50%); $30,000-$60,000 taxed at 5.99% (current is 6.25%) and an excess of $60,000 taxed at 6.21% (current is 6.45%). For Tax Year 2014, the House plan proposes rates of 3.24% for zero to $30,000; 5.85% for $30,000 to $60,000, and 6.10% for an excess above $60,000.  The Governor’s tax plan only proposes two income tax brackets.

Non-wage Business Tax:

While Brownback’s plan exempts all non-wage business income for limited liability and Subchapter S corporations and sole proprietorships, the House plan exempts income for those business models with less than $100,000 income in tax years 2013-2015, then raises the exemption to $250,000 for tax years 2016 and 2017 and eliminates all non-wage business income in tax year 2018

Sales Tax Rate and Transportation:

• The 6/10th of a percent sales tax will sunset as currently provided by the law.
• The remaining 4/10th of a percent sales tax goes to the Kansas Department of Transportation.
• The sales tax revenue for transportation is frozen at Fiscal Year 2013 levels, resulting in a $159.6 million loss to the T-WORKS program.       

Earned Income Tax Credit:

The Earned Income Tax Credit, which Brownback eliminated in his plan, would be scaled back from the current 18% to 9% in tax year 2014 in the House plan.

Marlee Carpenter
Bright and Carpenter Consulting
(785) 213-0185 cell phone
marlee@brightcarpenter.com
www.brightcarpenter.com