Topeka – Joined by small business owners, state legislators, Governor’s Council of Economic Advisors, Governor’s Cabinet members and Lt. Gov. Jeff Colyer, M.D., Kansas Governor Sam Brownback signed one of the largest tax relief measures in Kansas history into law today at the Capitol in Topeka. The new law cuts state income tax rates for all hard-working Kansans by 14 to 24 percent and eliminates state income taxes on more than 191,000 small business owners.
Governor Brownback likened Senate Sub. for House Bill 2117 to a shot of adrenaline into the heart of the Kansas economy.
“My faith is in the people of Kansas, not the government’s ability to tax and redistribute. They know better how to spend their money and I believe they will do incredible things with it,” Brownback said. “Today’s legislation will create tens of thousands of new jobs and help make Kansas the best place in America to start and grow a small business. Now is the time to grow our economy, not state government, and that’s what this tax cut will do.”
Kansas Revenue Secretary Nick Jordan said the new law will leave $1.1 billion in Kansans’ pockets during the next two years to save, spend and invest.
"After the lost decade for jobs in Kansas, Governor Brownback has been incredibly focused on creating a pro-growth environment that will increase Kansas families' income and accelerate small business growth," Jordan said. "This focus has turned the budget deficit he inherited into a strong surplus, and, with historic tax relief now in place, Kansas is poised to lead America's economic recovery."
The law collapses the current three-bracket structure for individual state income taxes (3.5, 6.25 and 6.45 percent respectively) into a two-bracket system using rates of 3.0 and 4.9 percent. The business income exemption eliminates certain non-wage business income for small business owners (income reported by LLC’s, Subchapter-S Corporations, and sole proprietorships on lines 12, 17, and 18 of federal form 1040).
The law also flattens the tax structure and increases the standard deduction amount for single head-of-household filers from $4,500 to $9,000; and for married taxpayers filing jointly from $6,000 to $9,000.
Dynamic projections show the new law will result in 22,900 new jobs, give $2 billion more in disposable income to Kansans and increase population by 35,740, all in addition to the normal growth rate of the state.
Speaker of the House Mike O’Neal praised the new tax law.
“By reforming income taxes in Kansas, our state will start building a solid tax foundation that will create a strong economy for the years to come. We must continue down a path that brings prosperity to the residents of Kansas and HB 2117 will move our state toward a healthy and vibrant economy," Speaker O’Neal said.
Rep. Arlen Siegfreid, the Majority Leader in the House, said the new tax plan paints a brighter future for the state.
"There's a reason surrounding states are racing to keep pace with Kansas in providing tax relief," Rep. Siegfreid said. "They recognize this was a significant victory in a constant battle to attract jobs and grow our economy."
The chair of the House Taxation Committee, Rep. Richard Carlson, said Kansas is raising the bar on pro-growth tax policy.
“Kansas is embarking on and setting the threshold for the nation with a pro-growth, pro-jobs tax reform policy,” Rep. Carlson said. “Lowering taxes on individuals and small businesses will jump start the private sector growth in Kansas, allowing Kansans to grow Kansas. We invite the nation’s businesses to come grow with Kansas.”
Others joining the Governor for the bill signing included legislators: Sen. Dennis Pyle, Reps. Joe Patton, Brett Hildabrand, and Terri Lois Gregory; Governor’s Cabinet members: Labor Sec. Karin Brownlee, Commerce Sec. Pat George, K-DOT Sec. Mike King, Agriculture, Sec. Dale Rodman, Corrections Sec. Ray Roberts, Aging Sec. Shawn Sullivan, SRS Sec. Phyllis Gilmore, Administration Sec. Dennis Taylor; David Murfin, Kansas Chamber Chairman & President of Murfin Drilling Company; Jason Watkins, Wichita Metro Chamber of Commerce; Derrick Sontag, Americans for Prosperity; Dave Trabert, Kansas Policy Institute; and members of the Governor’s Council of Economic Advisors: Patti Bossert, President of Key Staffing; Alfred Botchway, PH.D. President of Xenometrics, LLC; and Larry Sevier, CEO of NEX-Tech, Inc.
The bill, Senate Substitute for House Bill 2117, passed the Senate by a vote of 29-11 and the House by a vote of 64-59.