On Tuesday, June 6, the Kansas Senate and House voted together to override Gov. Sam Brownback’s veto of a bill which raises income taxes. The Legislature was attempting to fill a hole in the state budget and increase funding for state services, especially education as mandated by the Kansas Supreme Court.
Governor Brownback vetoed the bill following passage, but the Senate voted 27-13 and the House voted 88-31 to override the veto, as reported by the Topeka Capital-Journal in ”Senate, House narrowly override Gov. Sam Brownback’s veto of $1.2 billion tax bill.”
The bill will increase taxes by removing former tax cuts and raising the rates that were formerly in effect. The law is retroactive to January 1, 2017. For 2017, the tax rates are phased in; for married individuals filing jointly and for individuals the three brackets are 2.9%, 4.9% and 5.2%. For 2018 those rates increase to 3.1%, 5.25% and 5.7. The three brackets for individuals are $15,000 or below, more than $15,000 but less than $30,000, and over $30,000. For married individuals filing jointly the brackets are double the individual brackets.
In addition, the bill also eliminates the 2012 tax cuts on businesses and farmers, reinstating tax on income from corporations, LLCs, partnerships, and other entities. Beginning January 1, 2017, net profits from businesses reported on Schedule C, a K-1 (income from rental real estate, royalties, partnerships, S corporations, estates and trusts), net farm rental income reported on Schedule E, and net farm profit on Schedule F will all be included in net income.
If you are a Kansas business owner, it’s crucial that you meet with your planning team—especially your attorney and accountant—to make sure you’ve maximized your planning to be as tax efficient as possible. Regular reviews with your team will make sure you’re prepared for changes like these.
Although estate planning often focuses on what will happen after you die, there are many planning tools that can be used to reduce income taxes during your lifetime. For individuals, it’s important to meet with your attorney and accountant to plan to minimize taxes both during your lifetime and for your beneficiaries after you’re gone.
Reference: Topeka Capital-Journal “Senate, House narrowly override Gov. Sam Brownback’s veto of $1.2 billion tax bill.”
Photo by Danell Chestnut. Used with permission.