Top Republican legislators in Kansas have reached an agreement on tax cuts with the Democratic governor, following their decision to abandon the proposal of implementing a single-rate personal income tax, which was strongly opposed by the governor.
The Kansas House and Senate were anticipated to vote on the compromise package either on Thursday or Friday, with Gov. Laura Kelly likely to sign it if it reaches her desk. This plan is projected to save taxpayers approximately $1.4 billion over the next three years. However, it is smaller in scale compared to the plans previously approved by each chamber last month, as well as the one passed by the Republican-controlled Legislature in January, which Kelly vetoed.
GOP leaders had proposed a plan to consolidate Kansas’ personal income tax rates into a single rate, a move that would have reduced the top rate from its current 5.7%. Governor Kelly argued that this would primarily benefit the “super wealthy.” This disagreement over tax cuts has persisted since 2023 when several other states successfully implemented similar measures, as reported by the conservative Tax Foundation.
The compromise plan maintains three personal income tax rates, while reducing the top rate to 5.5%. Republican leaders were unable to override a potential veto from Kelly with a single-rate plan due to the lack of two-thirds majorities. Masterson, the state Senate President, described the defectors as individuals who were firmly committed to opposing progressive taxation.
“So, guess what? We’re simply going to trim the top of the tree,” Masterson, a Republican from the Wichita area, confidently declared. “It’s a complete victory in every other aspect.”
The bill aims to provide relief for retirees by eliminating state income taxes on their Social Security benefits once their annual income exceeds $75,000. Moreover, it proposes an increase in the state’s standard personal income tax deductions and an expansion of the income tax credit for child care expenses. To further alleviate financial burdens, the bill plans to reduce property taxes designated for public schools. Additionally, it proposes an early termination of the state’s expiring 2% sales tax on groceries, moving the date to July 1.
Despite the final deal being reached, it still managed to generate some dissatisfaction from both sides of the political spectrum. Instead of following the usual process of having a bipartisan group of House and Senate negotiators draft a plan, Kelly’s office and GOP leaders decided to handle the negotiations privately. This resulted in some discussions being held behind closed doors, rather than in public.
Adam Smith, the Chair of the House Taxation Committee, expressed uncertainty about his support for the deal. This is unusual considering that it is his responsibility to explain the details of the agreement to his colleagues and advocate for plans endorsed by GOP leaders.
“I’m hearing a lot of disagreement,” expressed Smith, a Republican from western Kansas. “I have the responsibility to support the bill, yet it’s disheartening when I’m unsure of how I will vote for it.”
Republicans had initially aimed to reduce taxes by $500 million to $600 million per year, or a total of $1.5 billion to $1.8 billion over a span of three years. However, the revised plan now proposes a slightly lower amount of approximately $430 million per year. Moreover, this new plan is not as generous as the Senate’s version when it comes to expanding standard deductions. Specifically, the Senate’s plan sought to raise the standard deduction for married couples to $22,000 in order to provide assistance to lower-income households.
Lawmakers have voiced concerns that the new plan falls short in reducing property taxes adequately, especially considering the increasing home values and local levies. If we take into account a home at the median value of $210,000 in Kansas, the estimated annual savings would only amount to around $140.
“This just doesn’t cut it,” expressed Senator Tom Holland of northeastern Kansas, who represented the Democratic senators during the tax negotiations. “The annual increases are simply monstrous.”
In Kansas, a deal was struck two weeks after the Republican-controlled Legislature of Georgia passed income tax cuts, a move supported by GOP Gov. Brian Kemp. Similar to Georgia, Kansas also boasts a significant budget surplus, which is projected to exceed $4 billion by the end of June 2025.
Tax debates in Kansas have been highly contentious, largely due to the widely-known experiment in cutting income taxes that took place between 2012 and 2013 under the leadership of Republican Governor Sam Brownback. This experiment resulted in significant budget shortfalls, which persisted until bipartisan legislative majorities decided to reverse most of the tax cuts in 2017, despite Brownback’s opposition.
In 2018, Kelly secured her first term by opposing Brownback’s fiscal policies, which she continues to criticize when speaking out against Republican proposals. She described the GOP plan she vetoed in January as fiscally irresponsible.
Republican leaders repeatedly emphasized that they were determined to avoid the mistakes made in 2012 and 2013. They firmly believed that Kansas, with its substantial surplus, was fully capable of supporting the proposed cuts.
However, they were no longer willing to take the risk of having no cuts implemented this year, as they lacked the power to override a veto from Kelly. This year, all 40 state Senate seats and 125 House seats are up for election.
“We need to reach a compromise and secure something,” expressed House Speaker Dan Hawkins, a Republican from Wichita. “Our priority is to get this done and move forward.”
