Tax Credits for Working Families

Kansas

Earned Income Tax Credit^

Income Tax Rate: Graduated 3.5-6.45 percent, will change to 3-4.9 percent starting in 2013

State EITC: Yes

Refundable: Yes

Enacted: 1998; expanded in 2007 and temporarily expanded again in 2010

Formula: 18 percent of the federal EITC in tax years 2010-2012; 17 percent of the federal EITC thereafter

Notes/News: During the 2007 legislative session, the Kansas Legislature increased the EITC to 17 percent of the federal EITC. In 2010, the legislature offset a temporary increase in the sales tax with a temporary increase in the EITC from 17 to 18 percent of the federal credit.1 In 2011, the Kansas House developed a major tax bill, HB 2347. The original bill would have reduced the state EITC over a couple of years to 5 percent and made it nonrefundable. The bill was changed in committee to return the EITC to 17 percent of the federal EITC, and convert the refundable portion of the EITC into a credit against taxes in future years. However the bill was never passed by the full House and no companion Senate legislation was introduced. The Kansas regular legislative session ended without any change to its EITC.

In his 2012 State of the State address, Governor Brownback proposed eliminating the EITC as part of a significant tax system revision. Four bills worked their way through the legislative process: HB 2560, the governor’s tax proposal in the House; SB 339, the governor’s tax proposal in the Senate; the House leadership tax proposal (HB 2747, later renamed House Substitute for Senate Bill 177) that would have cut the EITC in half from 18 percent to 9 percent of the federal credit; and Senate Substitute for House Bill 2161, which originally would have made the EITC non-refundable. The last bill was later revised  as Senate Substitute for HB 2117, which kept the EITC refundable and intact at its current level. In negotiations to work out a final bill, House and Senate negotiators struck a deal that would maintain the state Earned Income Tax Credit, but require low-income Kansans to choose between using the EITC or the state’s food sales tax rebate.  However, on May 10,  the House passed Senate Substitute for HB 2117, which the Senate had already passed, and sent it to the Governor. According to press reports, they did so in an effort to get this bill before the Governor before the Senate could revoke it and end the session without any tax bill. The Governor indicated that he would hold off signing it to try to negotiate a tax bill that had more offsets for the costs of tax cuts. On Tuesday, May 15, the Senate proposed a bill that would reduce the EITC from 18 percent of the federal credit to 13 percent.

On Thursday, May 17, the Governor and legislative leaders announced a new deal that would reduce state revenues less, and would reduce the EITC from 18 percent to 15 percent of the federal EITC. However, the legislative session ended on Sunday May 20, without passage of this deal, and on May 22 the governor signed Senate Substitute for HB 2117, which will leave the EITC at its current level and fully refundable.

On March 20, 2013, the Kansas Senate Committee on Assessment and Taxation passed a bill, SB 232, to reduce the state Earned Income Tax Credit from 17 percent to 9 percent of the federal credit. The bill was passed by the full Senate on April 1, but rejected by the chairman of the House Taxation Committee on April 3. The bill was thenamended into HB 2060 and was sent to conference committee. However, in early June the governor and the legislature reached a budget deal that leaves the state EITC untouched.

Reports/Materials: Will Gov. Brownback protect the EITC?, Kansas Center for Economic Growth

“Protect the EITC” banner, Kansas Center for Economic Growth

Stand together, Letter to the editor by Sister Tarcisia Roths, The Wichita Eagle, May 2013

EITC helps lift people from poverty, Letter to the editor by Jamie Schmaltz, The Wichita Eagle, May 2013

Guest blog: Working mom uses EITC to move from shelter to own home, by Tosha Jansen-Conkey, Kansas Action For Children, April 2013

A small chunk of change is a big deal to the poor, Op-ed by Barbara Shelly, The Kansas City Star, April 2013

A personal plea, Hutchinson News editorial board, April 2013

EITC: A Tax Credit That Works For Working Families, Kansas Center For Economic Growth, March 2013

Sister Therese Bangert: Keep tax credit for low income, The Wichita Eagle, March 2013

Kansas State & Local Taxes, from Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy, January 2013

Kansas Tax Reform in 2012: What does it mean for children and families?, Kansas Action for Children, August 2012

Kansas Governor Tax Proposal: Wealthy Kansas Pay Less, Poor and Middle-Income Kansas Pay More, Institute on Taxation and Economic Policy and Kansas Action for Children, January 2012

Earned Income Tax Credit: Lifting Families Out of Poverty, Kansas Action for Children, January 2012

Kansas: State and Local Taxes in 2007, Institute on Taxation and Economic Policy, November 2009

Child Tax Credit^

State Credit: No

Child and Dependent Care Tax Credit^

State Credit: No

Notes/News: Until 2012, Kansas had a Child and Dependent Care Credit that was non-refundable, with the same eligibility requirements as the federal credit, for 25 percent of the federal Child and Dependent Care Credit up to $263 for one child, $525 for two or more children. In his 2012 State of the State address, Governor Brownback proposed eliminating the Child and Dependent Care Tax Credit as part of a significant tax system revision. An early version of a House/Senate conference agreement eliminated this credit, although that agreement was revised the week of April 30-May 4 to retain the credit. However, Senate Substitute for HB 2117, which was sent to the Governor on May 9, eliminated this credit. The Governor initially held off signing this bill to try to negotiate a different tax bill (see discussion in EITC note), but when the legislative session ended without passage of another tax bill, the Governor signed Senate Substitute for HB2117 on May 22, thus eliminating the Child and Dependent Care Credit.

Reports/Materials: Kansas Tax Reform in 2012: What does it mean for children and families?, Kansas Action for Children, August 2012

Tax Bill Signed by Governor Brownback Makes Kansas an Outlier, Institute on Taxation and Economic Policy, May 2012

Property Tax Circuit Breaker^

Circuit Breaker: No

Notes/News: While Kansas does not have a Property Tax Circuit Breaker, it does have a Homestead Tax Credit. On Wednesday March 14, the Senate Committee on Assessment and Taxation passed out Senate Substitute for House Bill 2161, which would eliminate the Homestead Program for renters but increase it for homeowners. The companion House bill did not change the Homestead Tax Credit. The conference committee negotiating the final bill retained the provision eliminating the Homestead Program for renters, using the cost savings to reinstate the Child and Dependent Care Credit. However, Senate Substitute for HB 2117 would eliminate both the renters’ credit and the Child and Dependent Care Credit. The Governor held off signing this bill to negotiate a different tax bill, (see EITC note above) but when the legislative session  ended without passage of another tax bill, the Governor signed Senate Substitute for HB2117 on May 22, thus eliminating the Homestead Program for renters and increasing it for owners.

Reports/Materials: Kansas Tax Reform in 2012: What does it mean for children and families?, Kansas Action for Children, August 2012 Tax Bill Signed by Governor Brownback Makes Kansas an Outlier, Institute on Taxation and Economic Policy, May 2012