TOPEKA, Kan. -- A special legislative committee is considering a bill that would allow Kansans to continue to itemize deductions on their state return, even though tax reform prevents them from itemizing on their federal returns.
Supporters say the change is necessary to prevent a state tax hike.
The federal standard deduction has nearly doubled under President Trump's tax reforms that became law last year.
That means many Kansans are finding they no longer have enough deductions to itemize.
And while a bigger standard deduction may help lower your federal tax bill, some are finding it's also resulting in an increase to their state taxes.
That's because Kansas does not allow taxpayers to itemize if they claim the federal standard deduction.
And the state standard deduction has not changed. Instead lawmakers are pushing a bill that would allow Kansans to continue to submit itemized deductions, retroactive to 2018.
"It takes quite a hit on the middle class if we don’t decouple because of that," said Sen. Julia Lynn, a Republican from Olathe, Kan. "Because we are hooked to what the federal system does. So our goal is to decouple because we don’t want the middle class to get hit with a tax increase and we don’t want businesses to get taxed with a big increase."
The committee learned that as a result of federal tax reform, Kansas may reap $400 million in additional revenue from individuals and businesses.
The bill being considered also would change corporate and business tax structures in the Sunflower State, so that companies can bring back profits from overseas to reinvest in Kansas, without concern of facing higher state taxes here.
At least one lawmaker questioned giving up $400 million in revenue when Kansas faces court challenges over school finance. The concern is that cutting taxes again will create another deficit for the Sunflower State.