by Stephen Koranda, Kansas News Service
Many Kansas workers will see a change in their paychecks because of an income tax increase that took effect Saturday.
Lawmakers approved a $1.2 billion income tax increase to close a projected $900 million budget gap for the next two fiscal years.
The new law raises income tax rates and reinstates income taxes on thousands of business owners.
“We’re encouraging everybody to just think about it,” said Kansas Revenue Secretary Sam Williams.
Williams recommends that employees who are paid at an hourly rate check their paychecks in July to make sure the income tax withholding has been increased.
Under current law, there are two income tax brackets with rates of 2.7 percent and 4.6 percent. The new law creates a third bracket, and has rates of 2.9 percent, 4.9 percent and 5.2 percent.
The new law also eliminates an income tax exemption created in 2012 for more than 300,000 businesses owners. That means many businesses will have to start making quarterly tax payments.
“Businesses that were created in that time, they haven’t been in the habit of making any estimated tax payments,” Williams said.
The tax changes are retroactive to the beginning of 2017.
Andy Phillips, with The Tax Institute at H&R Block, agreed that it’s a good idea for individuals to make sure their withholding amount has increased. For businesses, he said it’s important to see if tax payments need to be updated.
“Visit with your tax adviser, even on your own do an online tax calculator. Determine what this means to you,” he said.
Phillips said workers or business owners who don’t make changes could face a larger-than-expected tax bill next April.
“It’s extremely important to have that midyear checkup and determine if you need to take some proactive steps and not have a surprise waiting for you,” he said.
Kansans will not face late penalties or interest as long as all taxes due are paid by April 2018.
The new law also will reinstate some tax deductions and credits, but those won’t begin phasing back in until next year.
Stephen Koranda is Statehouse reporter for Kansas Public Radio, a partner in the Kansas News Service. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.
See more at http://kcur.org/post/new-kansas-income-tax-law-means-changes-small-businesses-and-paychecks
