Kansas House Bill HB2318

Kansas 2025-2026 Regular Session

• Introduced: 2/6/25
• Refer: 2/6/25
• Report Pass: 3/17/25
• Engrossed: 3/21/25
• Refer: 3/25/25

Caption

Providing that future income and privilege tax rate decreases be contingent on exceeding tax receipt revenues.

Summary

HB 2318 would tie future Kansas income tax rate reductions to state revenue performance. Beginning August 15, 2025, and each year thereafter, the director of the budget would compare the prior fiscal year’s general revenue fund collections to an inflation-adjusted 2024 base year benchmark. If collections exceed that benchmark, the secretary of revenue must calculate and publish an income tax rate reduction for the next tax year, with the reduction sized to use up the excess revenue as closely as possible. The bill also sets a floor for the income tax structure. It directs that rate reductions be applied proportionally until the lower individual income tax rate reaches 4.5%, after which further reductions would apply only to the higher rate until it also reaches 4.5%. For corporations, the bill similarly provides that the normal tax and surtax would be reduced in sequence until the combined rate reaches 4.5%, after which no further reductions would occur. The bill amends the existing income tax statute to make the current rates subject to this new revenue-triggered mechanism and to adjust brackets and thresholds accordingly.

Impact

The bill would amend K.S.A. 2024 Supp. 79-32,110, which governs Kansas individual, corporate, nonresident, and fiduciary income tax rates. Its practical effect is to convert future tax cuts from a discretionary or scheduled policy choice into an automatic mechanism conditioned on revenue collections exceeding an inflation-adjusted baseline. It would affect the state general fund, the Department of Revenue, the director of the budget, taxpayers, and corporations by creating a recurring annual revenue test that could trigger lower income tax rates and bracket adjustments.

Sentiment

The available voting history suggests the bill had meaningful support but also notable opposition, passing the House on emergency final action by an 84-34 vote. The bill was requested on behalf of the Kansas Chamber of Commerce, indicating support from business and tax-cut advocates. No committee transcript is available, so the record does not show detailed debate, but the vote margin suggests the proposal was generally favored while still drawing substantial concern from members who may have been wary of automatic tax reductions tied to revenue volatility.

Contention

The main point of contention is the policy choice to make tax cuts automatic whenever revenues exceed an inflation-adjusted benchmark. Supporters are likely to view this as a taxpayer-protection and tax-relief measure that returns surplus revenue to Kansans and businesses. Opponents are likely to worry that the formula could reduce state revenues needed for schools, health care, transportation, and other services, especially if revenue growth is uneven or if the inflation adjustment does not fully capture fiscal pressures. Another likely issue is the bill’s hard cap at 4.5% for both individual and corporate rates, which could be seen either as a safeguard or as an arbitrary limit on future tax policy flexibility.