TOPEKA — Tax revenues flowing into state coffers grew only slightly in July, despite a significant increase in individual income tax rates that Kansas lawmakers approved this year, the Kansas Department of Revenue reported Tuesday.
The July revenue report, the first monthly report in the state’s new fiscal year, showed total taxes flowing into state coffers grew $28.4 million, or roughly 7 percent, compared with the same month a year ago. Most of that, $22.4 million, was directly attributed to individual income taxes.
In June, Kansas lawmakers overrode Gov. Sam Brownback’s veto and passed a tax bill that reverses course on the sweeping income tax cuts he championed in 2012. That legislation is expected to generate $591 million in the current fiscal year through higher individual rates, a return to a three-bracket tax system and repeal of Brownback’s controversial exemption for certain kinds of nonwage business income.
Budget analysts in the Legislature’s nonpartisan Research Department said many private-sector employers did not implement the new, higher withholding rates immediately because software companies used by human resource departments were slow to publish updates with the new tax rates.
In addition, they said, the bill that lawmakers passed included a provision that says business owners who were put back on the tax rolls will not have to pay interest or penalties if they underpay their quarterly estimated tax payments during tax year 2017.
That means many of those business owners may not pay their taxes until April 15, 2018.
“The new tax law brings so many ramifications that it’s difficult to separate economic trends from the tax increase,” Revenue Secretary Sam Williams said in a news release announcing the July numbers. “We expect to have more understanding in the coming months.”
All told, the state collected $453.5 million in taxes in July, which was $7.6 million, or 1.7 percent, more than forecasters had expected.
That included $203.5 million in retail sales taxes, which was $5.5 million more than expected in July and $8.3 million higher than July 2016. That represents 4.26 percent growth over the year.
Corporate income taxes, at just under $15 million, were less than 1 percent higher than the official estimate for the month but $5.8 million higher than the same month a year ago.