Sandlian Center economist cautions against unintended consequences continuing with tax law

A routine adjustment in federal tax law could be a problem for more Kansans next year, according to an economist with the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute.

“In our research of the Governor’s twice-vetoed tax windfall, as well as looking at federal and state law, we realize, Kansas has effectively laid a surprise tax increase trap for thousands of Kansans starting in 2020,” said Michael Austin.

Due to the Tax Cuts and Jobs Act, taking the standard deduction federally will become a better bet for more Kansans each year, but that doesn’t necessarily mean they’ll pay less in state taxes.

“The trap is sprung for any Kansan who would normally take the federal itemized deductions and then switch and take the federal standard instead,” said Austin. “Kansas law says that those who switch to take the federal standard must take the Kansas standard.”

Ninety thousand Kansas tax filers had that circumstance in 2019. In 2020, the Kansas Department of Revenue estimates up to 5,300 more would make that choice.

“The windfall veto, here, is unfortunately not a one and done issue,” said Austin. “It, unfortunately, has the makings of a never-ending tax hike. As long as that federal standard deduction continues to be adjusted for inflation, continues to rise, more Kansans will be enticed to use that federal standard deduction and fall into the Kansas state tax trap.”

This is a policy discussion. Any tax advice is situation-dependent and you should seek the advice of a tax professional.