Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor

February 6, 2023


The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
300 SW 10th Avenue, Room 548-S
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 52 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 52 is
respectfully submitted to your committee.
Under current law, taxpayers filing as single, head of household, married filing separate,
or married filing jointly are allowed to subtract the full amount of Social Security benefits from
federal adjusted gross income for Kansas income tax purposes, if the taxpayer has income of
$75,000 or less. SB 52 would reduce the subtraction modification of Social Security benefits from
federal adjusted gross income by a mathematical formula for incomes above the $75,000 threshold
and below $85,000 for all taxpayers beginning in tax year 2023. This will allow taxpayers with
income of $75,000 up to $85,000 to subtract a portion of Social Security benefits from federal
adjusted gross income in tax year 2023. The upper income limitation in the calculation would be
increased by $5,000 in tax year 2024 and each future tax year allowing additional taxpayers the
ability to subtract a portion of Social Security benefits from federal adjusted gross income.
Calculations for Kansas income taxes are based on the Kansas adjusted gross income,
which is calculated by adding or subtracting certain types of income from the federal adjusted
gross income. The bill would allow a retired individual to subtract from Kansas taxable income
the amount received under all retirement plans. The subtraction modification would be capped at
$2,000 per taxpayer or $4,000 for married filing jointly and would be available beginning in tax
year 2023.
Estimated State Fiscal Effect
FY 2023 FY 2023 FY 2024 FY 2024
SGF All Funds SGF All Funds
Revenue -- -- ($51,800,000) ($51,800,000)
Expenditure -- -- $16,530 $16,530
FTE Pos. -- -- -- --
The Department of Revenue estimates that SB 52 would decrease State General Fund
revenues by $51.8 million in FY 2024, $44.9 million in FY 2025, and $49.8 million in FY 2026.
The Honorable Caryn Tyson, Chairperson
Page 2—SB 52

To formulate these estimates, the Department reviewed data on Social Security benefits and
retirement plan benefits from tax year 2020. The Department adjusted the amount of Social
Security benefits to account for cost-of-living adjustments that have occurred since tax year 2020
and used an average growth rate of 2.0 percent for future years. The Department created a
simulated tax table for all taxpayers that receive Social Security benefits that shows that State
General Fund revenues would decrease by $9.7 million in FY 2024 as a result of additional
taxpayers with incomes above the $75,000 threshold qualifying for the Social Security subtraction
modification. The bill also allows an exemption of $2,000 for individuals and $4,000 for married
filing joint taxpayers for all retirement plan income included in federal adjusted gross income
which would reduce State General Fund revenues by $42.1 million in FY 2024. The estimated
fiscal effect by specific tax policy change would be as follows:
Tax Policy Changes FY 2024 FY 2025 FY 2026
Social Security Phase Out ($9,700,000) ($11,400,000) ($15,400,000)
Retirement Income Exemption (42,100,000) (33,500,000) (34,500,000)
Total SGF ($51,800,000) ($44,900,000) ($49,900,000)
The individual income tax estimate for FY 2024 includes 100.0 percent of tax year 2023
tax liability and 30.0 percent of tax year 2024 tax liability. The individual income tax estimate for
FY 2025 includes 70.0 percent of tax year 2024 tax liability and 30.0 percent of tax year 2025 tax
liability. The Department estimates that the number of tax returns grows approximately 1.0
percent each year.
The Department indicates that the bill would require $16,530 from the State General Fund
in FY 2024 to implement the bill and to modify the automated tax system. The required
programming for this bill by itself would be performed by existing staff of the Department of
Revenue. In addition, if the combined effect of implementing this bill and other enacted legislation
exceeds the Department’s programming resources, or if the time for implementing the changes is
too short, additional expenditures for outside contract programmer services beyond the
Department’s current budget may be required.
The fiscal effect associated with SB 52 is partially reflected in The FY 2024 Governor’s
Budget Report. In The FY 2024 Governor’s Budget Report, the Governor recommends smoothing
out the social security cliff, so no Kansan making under $100,000 pays full taxes on Social Security
income, which is estimated to reduce State General Fund revenue by $20.5 million in FY 2024,
$16.0 million in FY 2025, and $16.1 million in FY 2026.

Sincerely,

Adam Proffitt
Director of the Budget
cc: Tamara Emery, Department of Administration
Lynn Robinson, Department of Revenue


Statutes affected:
As introduced: 79-32