TOPEKA, Kan. (AP) -- The Kansas Department of Revenue is posting guidance regarding two provisions of the state income tax law ahead of changes that take effect in January.
Spokeswoman Jeannine Koranda said Tuesday that the guidance lets accountants, tax attorneys and residents know how the agency will be interpreting inconsistencies within the law. One of the items deals with how the taxpayers will be able to use itemized deductions to reduce their tax liability.
The state also sent out mailers earlier this year to 146,000 businesses to inform them about the new tax law and how it could apply to them.
"The reason for that is that they are the ones who really have to take any action before Jan. 1," Koranda said, such as changing how the business is organized for tax purposes. "Most people won't have to deal with the new law before next year when we send out the tax forms."
Koranda says the revenue department will ask the 2013 Legislature to make changes to the law to codify the guidance.
The state will reduce individual income tax rates, drop the top tax rate to 4.9 percent from 6.45 percent and increase the standard deductions claimed by married couples and heads-of-household. The state also will exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from taxes.
Koranda said the impact will vary depending on each individual taxpayer and how they file their return, including marital status, number of children and how many other deductions or exemptions that are claimed. For example, a married head-of-household tax filer earning $52,000 a year should see about $12 more in a biweekly paycheck.
"One of the other places that people will see is the change in 2014 when they get the higher standard deduction that doubles to $9,000 for married and single head-of-household payers," she said.
Legislative researchers have estimated that the cuts will be worth $4.5 billion over the next six years. But the researchers also project that the cuts will create collective budget shortfalls approaching $2.5 billion during the same period. A group of state officials and economists estimate legislators will have to close a projected shortfall of more than $327 million next spring when they draft the state budget for fiscal year 2014.
Koranda didn't know how many existing businesses might be changing their classification to take advantage of the tax changes.
"Honestly, we won't know if businesses were changing their structures until they file their taxes in 2014 more than a year from now," she said.