Overriding the veto of Governor Laura Kelly, the Kansas legislature passed S.B. 269, which retroactive to January 1, 2025, allows for decreases in the personal income tax rate if the state budget stabilization fund ("rainy day fund") is equal to or exceeds 15% of the prior fiscal year's balance.

Kansas personal income tax rates currently range from 5.2% to 5.58%. S.B. 269 will, if applied, gradually lowers the 5.2% rate and the 5.58% rate until they reach 4.0%.

The law directs the state's Budget Director to determine by August 15, 2025, whether an income tax rate reduction applies for tax year 2025.

This is the second consecutive year that Kansas legislation has called for a retroactive income tax rate reduction. In 2024, Governor Laura Kelly approved S.B.1, which retroactive to January 1, 2024, lowered the personal income tax brackets from three to two with the highest tax rate lowered from 5.7% to 5.58%. The law also increased the personal exemption and standard deductions.

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If the 2025 withholding formula is updated, it will be posted here. Also note that the Kansas Department of Revenue currently allows for a supplemental withholding rate of 5.0%, which may change depending on the size of the decrease in the income tax rate. (Kansas Withholding Tax Guide, p. 8.)