Kansas ~ Personal Income, Sales and Use Taxes: House Passes Income Tax Rate Reduction, Sales Tax Exemption for Grocery Food

The Kansas House of Representatives has approved legislation that would make numerous changes to corporate and personal income taxes, expand the Rural Opportunity Zone (ROZ) program, and eliminate the sales tax on grocery food purchases.

If enacted, the legislation as currently drafted would provide for formulaic income tax rate reductions and eventual repeal, beginning in tax year 2013. The reductions, which would be based on the extent to which a certain specified group of general fund tax sources have increased over the previous fiscal year, would begin with the personal income tax. After the personal income tax is completely repealed, the rate rollback provisions would be applied to the corporation income tax surtax. When the corporation surtax is repealed, adjustments would begin to the corporation base rate and to financial institution privilege tax rates.

Additionally, if enacted, the bill would add an additional 24 counties to the Rural Opportunity Zone (ROZ) program, which effectively provides an income tax exemption for certain out-of-state taxpayers who relocate to those counties. Under the approved legislation, the standard deduction for head-of-household filers would be increased from the current level of $4,500 to $9,000 beginning in tax year 2014 and the state earned income tax credit (EITC) would be reduced to 9% of the federal EITC, beginning in tax year 2014. Currently, the Kansas EITC is set at 18% and is scheduled to be reduced to 17% in tax year 2013.

Finally, the legislation, if enacted as currently drafted, would also exempt sales of “food and food ingredients” from sales tax, effective July 1, 2012. The legislation would also allow cities, counties, or other local taxing subdivisions of the state with sales tax authority to opt out of the grocery food exemption by means of an ordinance or resolution.

House Substitute S.B. 177, as passed by the Kansas House of Representatives on March 14, 2012; Supplemental Note on House Substitute for Senate Bill 177, Kansas Legislative Research Department

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting