A legislative override of Governor Sam Brownback’s veto on Senate Bill 30 earlier this month brought new Kansas income tax rates for individuals. Under SB 30, changes go into effect July 1, 2017, but the new rates are retroactive to the beginning of the year. Since the last major tax overhaul in 2012, individual Kansans have lived in the land of two brackets. The most recent change revives the third bracket and increases overall tax rates.
In response, Kansas Department of Revenue released updated payroll tax withholding tables earlier this week. KDOR recognizes this midyear change complicates most individuals tax situations. Since the tax rates were lower for January through June, many employees will not have enough tax withheld for the year. Although tax rates are set to increase again in 2018, KDOR structured the new tax tables to help employees “catch-up” on their withholding for 2017 and will allow the Department to avoid reissuing updated tax tables in another six months. Employers should start using the new payroll tax tables as soon as possible. Many payroll providers were pushing down tax table updates for their software within 24-hours of the Department publishing them. As every taxpayer’s situation is different, individuals should evaluate whether they will want to adjust Kansas withholding by filing an updated KW-4 with employers or if they will rectify any underpayment at the time of filing your 2017 return. Normally, penalties apply for underpayment of taxes. However, this legislation specifically provides that penalties will not be imposed if all the tax, that was underpaid as a result of the rate increases, is paid by April 17, 2018, the due date of calendar year 2017 income tax returns. If you have specific questions regarding how the law change will impact your situation, please contact us.