(MENAFN- ValueWalk)
Massive tax relief is coming for Kansas taxpayers now that lawmakers have approved a new bill that reduces income and property taxes.
This new tax relief from Kansas will cut income and property taxes by a total of $1.23 billion over the next three years. The new bill is a compromise between the Democratic governor and the GOP leaders of the House and Senate.
New tax relief from Kansas – what does it include?
On Tuesday, the Republican-controlled Legislature approved new tax relief from Kansas estimated to cost the state about $2 billion over the next five years or about $380 million per year.
The new bill combines the state's three income tax brackets into two and reduces the top rate from 5.58% to 5.2%. Also, joint filers will now be exempt from paying taxes on their first $25,000 in annual income.
Additionally, the bill eliminates taxes on Social Security (for those earning more than $75,000) and raises the standard deduction and personal exemptions. The bill also offers relief to homeowners by raising the residential exemption on state property taxes to $75,000, compared to $42,000 earlier.
Moreover, the bill doubles an income tax credit for child care expenses, and provides a 14% cut in the tax paid by banks and other financial institutions.
Even though the lawmakers talked about the food sales tax during the discussions, the bill makes no changes to the food sales tax. It implies that the state's sales tax on groceries will cease in January as previously planned.
Republicans wanted more
Gov. Laura Kelly, a Democrat, negotiated the bill with the House and Senate GOP leaders. Though some legislators made efforts to amend the bill, they failed to get enough support. Gov. Kelly is expected to sign the bill soon.
Many Republicans argued that the bill does little for taxpayers, and legislators on both sides believe the property tax relief could have been more. Though the bill reduces the tax for homeowners, the actual cut is lower than what lawmakers considered previously.
The drop in personal income tax accounts for about 87% of the bill's total relief, despite repeated demands from the Legislature that rising property taxes is their biggest concern.
Republicans wanted $230 million more in tax cuts over three years, but Kelly turned it down, arguing that bigger tax cuts could result in budget shortfalls. The bill offering new tax relief from Kansas cleared the Legislature with huge bipartisan majorities.
Gov. Kelly previously vetoed tax-cutting plans during the regular annual session in May. Since GOP leaders didn't want to anger voters in this year's elections, they agreed to the bill without any changes.
“Although this package is not perfect and emphasizes income tax reductions instead of property tax relief, it does provide significant relief,” Gov. Kelly said in a statement.
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