Working Kansans will take a hit in the pocketbook starting with their next paycheck.
The Kansas Legislature passed a record $1.2 billion tax increase spread over two years, retroactive to Jan. 1, 2017. Businesses, such as the limited liability companies, commonly known as LLCs, will pay state taxes for the first time since the LLC loophole was passed in 2012. These bills went into effect July 1.
Sen. Caryn Tyson, R-Parker, said last week during the Lemonade with Your Legislator event, the Kansas tax structure needs changes. She said most of the burden of the record tax bill was put on low- to middle-income individuals.
“There were tax proposals that would not have done this,” the Senate tax committee chair said. “We had one tax proposal that would have increased the standard deduction to meet the federal deduction. That would have helped the lowest income individuals to pay less taxes. I fought very hard for that, but was not able to get it passed.”
Jason Berve of Edward D. Jones, 101 N. Main St., Ottawa, said the majority of local workers need to reevaluate their budgets as paychecks will be stretched even further.
“They need to split their discretionary expenses away from their necessary,” he said. “The discretionary is what is going to be trimmed down a little bit from the [higher state] taxes. As long as everybody is organized and ready to go, they will be fine. People will give up a few more dollars.”
Berve said taxes or other paycheck-related expenses increase all the time.
“I would focus on things you can control,” Berve said. “We are not used to being hit with it in the middle of the year. Every year something rises.”
Berve said people will notice the difference next year when it is time to file income taxes and the refund is smaller or nonexistent.
“People who are used to the same exact amount — getting that 40-hour a week paycheck — they will definitely see it [decrease] a little bit,” he said.
Another option is looking at sheltering money in tax-free investments, Berve said.
“You can do things like that,” he said. “Those are exempt from state income taxes.”
Organizations’ human resource departments have been scrambling since early June to find the new percentages individuals pay starting July 1.
Here are the new state income tax tables (from tax-brackets.org):
• Married couples filing jointly with income up to $30,000 will be taxed at 3.1 percent.
• Individuals with annual income up to $15,000 will be taxed at 3.1 percent.
• Married couples with taxable income between $30,000 and $60,000 will be taxed at 5.25 percent.
• Individuals with taxable income between $15,000 and $30,000 will be taxed at 5.25 percent.
• Married couples with income above $60,000 will be taxed at 5.7 percent.
• Individuals with income above $30,000 will be taxed at 5.7 percent.