Tax collections for the 2025 fiscal year ended up beating estimates by $248.6 million despite tax cuts enacted last year, a new report shows.
The Kansas Legislature’s research arm on Thursday released a report showing the state’s revenue picture for the fiscal year that ended on June 30.
The Department of Revenue, which customarily releases a similar type of report each month, had not made its numbers public as of Thursday.
Tax receipts for fiscal 2025 were 2.5% above the estimate of $9.75 billion for the year, according to the legislative research report.
Five tax sources – individual income taxes, financial institutions, retail sales, compensating use and corporate franchise – were above the estimate by more than $1 million.
Two tax sources – corporate and oil severance – fell more than $1 million below the estimate.
Current law provides for 50% of the state general fund tax receipts above the adjusted April estimate to be transferred to the state’s rainy day fund.
The state general fund receipts reflect an unanticipated transfer out of the state general fund of $124.3 million to comply with the law.
The transfer left total general fund receipts for the year at about $132.3 million, or 1.3% higher than the estimate.
“Governor Kelly’s repeated vetoes of tax cuts and her sky is falling rhetoric look especially foolish now,” House Speaker Dan Hawkins said in a statement responding to the report.
“The work of the Republican supermajority that enabled Kansas taxpayers to keep more of their hard-earned money through tax relief has clearly energized our economy.
“Moving forward we will continue with the budgeting reforms we implemented this year to reduce wasteful spending and ensure a strong financial future for our state.”
A spokesperson for the governor could not immediately respond early Thursday night to Hawkins’ comments.
The overall tax bill enacted in 2024 moved the state to a two-tiered tax system with an upper tax bracket of 5.58% and a lower bracket of 5.2%.
The state originally had three tax brackets of 5.7%, 5.25% and 3.1%.
For married individuals filing jointly, taxable income of up to $46,000 was taxed at 5.2% under the bill while taxable income at $46,001 and above was taxed at 5.58%.
For all other filers, taxable income up to $23,000 was taxed at 5.2%, and taxable income of $23,001 and above was taxed at 5.58%.
The bill also increased the personal tax exemption for single filers to $9,160 from the previous level of $2,250 a person. For married couples filing jointly, the exemption increased to $18,320.
The tax bill was projected to cost the state about $471.6 million for the current fiscal year.
In April, state fiscal analysts increased their revenue forecasts by about $377 million for 2025 and 2026, although the state continued running a budget deficit that will leave its ending balance in the red by 2029.
While the new revenue forecasts painted a hopeful picture for the state, there were warnings of future uncertainty with the state spending $930 million more than revenues in fiscal 2025, $555 million more than revenues in 2026 and $831 million in 2027.
The latest revenue report shows that individual income tax receipts were above the estimate by $225.7 million, or 5.1%, for the fiscal year, including $71 million for June.
“This strength was primarily from withholding taxes, which exceeded the previous year’s amount by 8.2%,” the legislative research report said.
“Additionally, the Department of Revenue continues to process an atypically large number of individual income tax refunds, which will be paid to taxpayers throughout the summer months,” the report said.
The report warned that individual income tax receipts for July and August of fiscal year 2026 could be lower than anticipated because of delayed refunds.
Corporate income taxes came in at about $11.4 milllion, or 0.9%, below estimates for fiscal year 2025.
Sales and use taxes combined were above the yearly estimate by $30.5 million, or 0.9%, according to the report.
“This is the third consecutive month during which sales and use taxes have exceeded the estimate,” the report said.
