The recently enacted federal Tax Cuts and Jobs Act, for the most part, doesn’t go into effect until 2018. But Kansas made some major changes to the 2017 individual state returns Affecting most taxpayers are changes to the tax rates. The Kansas legislature also repealed their non-wage business income changes that went into effect in 2013. (But that’s a separate post.) Here’s what we will have to deal with this tax season.
For 1016 tax returns, there were only 2 individual tax rates – sort of. Last year taxpayers with taxable income less than $30,000 (MFJ) or $15,000 (everyone else) were taxed at 2.7%. Taxpayers with over $30,000/$15,000 were taxed at 4.6%. For 2018, there are now 3 tax brackets. The breaks for married filing joint taxpayers are at $30,000 (2.90% tax rate), between $30,000 and $60,000 the rate is 4.9% and taxable income over $60,001 will be taxed at 5.20%. The tax rates for all the single filers are the same but the breaks are higher $15,000 and $30,000.
Now for the “sort of.” 2016 tax returns had a low income tax break built into the tax tables and rates schedules and this has been carried into 2017. MFJ filers with taxable income less than $12,500 ($5,000 for everyone else) won’t have a tax liability. There is a hidden 0% tax rate that is not mentioned in the K-40 instructions. Taxpayers should be fine if they use the tax rate schedules or tax tables in the instructions Is it a big difference? Yes. A single filer with $4,990 in taxable income will have no tax but if their taxable income is $5,002 they will have $136 in tax. The other catch is the taxpayer will have to file the return to get the special rate. They can’t assume that since they don’t owe anything that they don’t have to file a return. No idea what will happen to taxpayers who would qualify for the lower rate but don’t file a tax return.