Kansas taxpayers will soon benefit from substantial tax cuts following the approval of a new bill aimed at reducing income and property taxes. The legislation, a compromise between the state’s Democratic governor and Republican leaders, will deliver $1.23 billion in tax relief over the next three years.
The newly approved bill, which the Republican-controlled Legislature passed, is expected to cost the state around $2 billion over five years, averaging about $380 million annually. Key provisions include the consolidation of the state’s three income tax brackets into two, with the top rate reduced from 5.58% to 5.2%. Additionally, joint filers will now be exempt from taxes on the first $25,000 of their annual income.
The bill also eliminates taxes on Social Security income for those earning over $75,000 and increases both the standard deduction and personal exemptions. Homeowners will receive relief as well, with the residential exemption on state property taxes raised to $75,000 from the previous $42,000.
Other significant measures include doubling the income tax credit for child care expenses and implementing a 14% reduction in taxes for banks and financial institutions. Despite discussions, the bill does not alter the food sales tax, meaning the state’s sales tax on groceries will still end in January as planned.
Although some Republicans wanted larger tax cuts, citing concerns over rising property taxes, the bill still passed with strong bipartisan support. Governor Kelly is expected to sign the bill soon, providing substantial, though not comprehensive, relief to Kansas taxpayers.