June 6, 2017 brought big changes to Kansas Taxpayers. The Kansas Legislature overrode Governor Brownback’s veto, passing SB 30 into law. SB 30 repeals many of the tax cuts enacted during 2012.
Most Kansas taxpayers will be impacted by SB 30 and many will pay more in Kansas tax starting in 2017.
Beginning in 2017:
- Repeal of the income tax adjustment for income or losses from Schedule C, Schedule E or Schedule F.
- Net Operating Losses-Reinstatement of the federal net operating loss deduction.
- Increase individual income tax rates:
- Before SB 30 -Two tax brackets with a top rate of 4.6%.
- After SB 30 -Three-bracket system with a top rate of 5.2% for taxable income over $30,000 ($60,000 for married filing jointly).
- Itemized Deductions will not change. This means that itemized deductions will be limited to the following amounts on the federal return:
- 100% of charitable contributions
- 50% of mortgage interest
- 50% of property taxes
Beginning in 2018 and beyond:
- Individual Income tax rates will increase to a top rate of 5.7% for taxable income over $30,000 ($60,000 for married filing jointly).
- Itemized Deductions will gradually be reinstated to the following amounts on the federal return:
- 2018-deduct 50% mortgage interest, property taxes and medical expenses
- 2019-deduct 75% mortgage interest, property taxes and medical expenses
- 2020 and beyond-100% mortgage interest property taxes and medical expenses
Charitable Contributions are 100% deductible in all years.
- Reduce the low income exclusion to $2,500 (single) and $5,000 (married filing jointly). This exclusion provides taxpayers with taxable income below the exclusion amounts to have a tax liability of zero. In 2017 the low income exclusion was $5,000 (single) and $12,500 (married filing joint).
- Reenact a credit for child and dependent care expenses
- 2018-12.5% of allowable federal amount
- 2019-18.75% of allowable federal amount
- 2020 and beyond-25% of allowable federal amount
As you can see from the above summary, 2017 will be an especially hard year for Kansas taxpayers. The exclusion of business income will be repealed, tax rates will be increasing but there will still be limits on itemized deductions. Please contact CPA WorldTax at taxinfo@cpaworldtaxllc.com or 888-512-4860 if you want to find out how these BIG Tax Changes will affect you.