Income Tax Savings for Kansas Residents

After several attempts, the Kansas Legislature passed (and the governor signed) a bill to reduce state taxes by $1.2 billion over three years. Pieces of this bill address taxes other than income taxes, but the income tax portion is significant. As is the case with tax bills, a lot of pieces are involved, but I want to highlight some of the major changes, such as tax bracket changes, exemption/deduction amount changes, exemption of Social Security benefits, and dependent care credits.

Tax Brackets, Exemptions, and Deductions

One significant change is moving to a two-bracket system rather than the current three-bracket system. Previously, the marginal brackets were 3.1%, 5.25%, and 5.7%. The new brackets are 5.2% and 5.58%.

While this change eliminates the smaller bracket, the amount of standard deduction and personal exemptions were increased, expanding the amount of income taxed at 0% before these marginal brackets begin to be applied.

The largest expansion comes in the personal exemptions. The personal exemption for single filers, heads of household, or married filing separately increased to $9,160 (previously $2,250 per person), plus an additional exemption of $2,320 for each dependent on the return. For married couples filing joint returns, the personal exemption is $18,320, plus the additional $2,320 for each dependent.

Standard deduction amounts were only slightly increased, moving to $3,605 for single ($3,500 prior), $8,240 for married ($8,000 prior), and $6,180 for head of household ($6,000 prior). It is important to remember that you can take a larger deduction if itemizing deductions will allow for it. You also do not have to itemize on your federal return to itemize on your Kansas return.

The charts below compare the prior marginal brackets with the new 2024 marginal brackets for each filing type.

Single Filers Marginal Brackets Chart

Married Filing Jointly Marginal Brackets Chart

Head of Household Marginal Brackets Chart

Social Security Benefits

For retirees, the biggest impact will likely be Social Security income. Previously, the federally taxable portion of a person’s Social Security benefits was only exempt from taxation on the Kansas return if their federal adjusted gross income (AGI) was less than $75,000.

However, under this new bill, all Social Security benefits are exempt from taxation on the Kansas return. This will mean a significant reduction in taxes for many retirees in Kansas.

Dependent Care Credits

Taxpayers who still have dependents at home will possibly see an impact on the credit they receive for child and dependent care costs. If the taxpayer can take the federal credit for these expenses, the credit they receive on their Kansas return could now possibly be as high as 50% of the federal credit (up from the prior 25%).

The overall impact of these changes will be different for each taxpayer’s unique situation. To find out how it impacts you personally, please reach out to your advisor to review your situation.

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Barbara Duncan, CFP®

As Partner and Senior Wealth Advisor, Barbara Duncan's favorite moments come when a client reaches a long-sought milestone and shares their appreciation for her help in reaching it.