Kansas still grappling with income tax reform

Although no one particularly likes paying income taxes, they play a crucial role in funding essential government services, including support for public schools.



March 28, 2024 - 12:38 PM

Kansas capitol building. Photo by KANSAS REFLECTOR/SHERMAN SMITH

The debate over implementing a flat income tax in Kansas appears to have reached its conclusion, at least in this legislative session. Earlier this year, Kansas Republicans proposed a single income tax rate of 5.25% for all Kansans earning more than $6,160 as an individual or $12,300 as a couple.

Republicans argued that a simple tax code with a single tax rate applied uniformly to all income levels could reduce the complexity and administrative burdens of our current system. 

Gov. Kelly and Kansas Democrats countered that the cuts associated with a flat tax would be financially irresponsible and inherently regressive, disproportionately burdening low-income earners compared to high-income earners

As expected, Kelly immediately vetoed the flat tax plan. Having failed to override Kelly’s veto, Republicans recently announced their support for a dual rate plan. This plan would exempt up to $7,000 in income from taxation. The state would then tax annual income up to $30,000 at a rate of 5.2% and annual income over $30,000 at a rate of 5.65%.

This new proposal is a departure from the current income tax policy, which taxes 3.10% on the first $15,000 of taxable income, 5.25% on the next $15,000, and 5.70% on all income above $30,000.

While Kelly has indicated her preference to provide tax relief while keep the current three-tier rate system, the introduction of the dual-rate plan proposal represents a new phase in tax discussions, where both sides have indicated that they want tax relief for Kansans.

All this discussion may lead Kansans to ask how their tax burden compares to residents of other states. Like many states, Kansas has a graduated or progressive income tax rate system. A graduated tax rate simply means that high income earners pay a higher tax rate than lower income works. Most of Kansas’ neighboring states also have a graduated systems with more than two tiers.

For example, Nebraska has four tiers in their state income tax program, with rates that range from 2.46% for Nebraska’s lowest earners to 6.64% for those making more than $35,730 annually. Similarly, Missouri and Oklahoma also have multi-tier graduated systems with rates ranging from 2% to 4.95% and 0% to 4.75%, respectively.

On the other hand, Colorado has a flat income tax rate of 4.55% for all taxable income, regardless of filing status or income level.

While the Kansas income tax plan is in line with neighboring states, Republicans are hoping their new plan will draw in additional legislative supporters, giving them the veto-proof majority needed to pass the plan with or without Kelly’s support.

It is important to remember that although no one particularly likes paying income taxes, they play a crucial role in funding essential government services, including support for public schools.

As Kansas continues to debate over its state income tax system, the path forward remains uncertain in the current political environment. Ultimately, the outcome of these discussions will shape the fiscal health of the state for years to come. 

About the author: Brianne Heidbreder, PhD, is an associate professor of political science at Kansas State University.