State revenues are running slightly higher than estimates for the current fiscal year with a new report providing the fullest picture yet of the fallout from last year’s income tax cuts.
The new report released Thursday showed that state tax revenues were beating estimates by about $17.6 million, or roughly 0.2%, for the current fiscal year through the end of April.
Overall, the state had hauled in about $8.28 billion for the first 10 months of the current fiscal year, which ends June 30.
The cumulative estimate for the 10 months through April was $8.26 billion.
“Kansas’ current financial health is strong, but we must remain committed to fiscally responsible budgeting to ensure lasting stability in the future,” Gov. Laura Kelly said.
The report was the first substantial glimpse of the fiscal effects of the income tax cuts that the Legislature passed and the governor signed into law last year.
The impact of the tax cuts was first seen in the February receipts once refunds were being sent out.
But the April receipts probably provide the most complete picture yet of the impact of those cuts once balance due payments were received April 15.
Officials, however, have said that the full picture might not be known until the end of May.
For April, the state recorded $1.33 billion in tax revenues, an increase of about 1.3% from the $1.315 billion estimate for the month.
“It’s very encouraging to see April revenue numbers come in greater than expected, proving even further that Gov. Kelly’s dire predictions were all just an attempt to derail much-needed tax relief,” House Speaker Dan Hawkins said.
“This year, the legislature cut the budget over $210 million and spent significantly less than what the governor proposed,” Hawkins said in a statement.
“Going forward, House Republicans remain committed to scrutinizing state spending
for efficiencies so we can further lower taxes and put more money back where it belongs, in the pockets of taxpayers,” he said.
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 bill also increased the standard deduction to $3,605 from $3,500 for single filers, to $8,240 from $8,000 for married couples filing jointly and to $6,180 from $6,000 for head of households.
The bill was projected to cost the state about $471.6 million for the current fiscal year.
Last month, 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 paint 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 state budget director warned that the state budget, drawn up by the Legislature for the first time this year, was “structurally imbalanced.”
The budget profile showed the state’s ending balance running $730.5 million in the red by fiscal year 2029, although it would still have a rainy-day fund of $1.9 billion.
At the time, the governor said the new revenue estimates signaled dire financial times ahead, something that the House speaker said was countered by April’s numbers.
“I hope in the future the governor will stop with the doom and gloom and join us in looking
out for the best interests of Kansas families,” Hawkins said.
