How are Kansas itemized deductions phased down starting in 2013?

Plain-English summary

Kansas Notice 13-11 (July 1, 2013) -- which replaces the revoked Notice 12-07 -- explains the Kansas itemized deduction rules after two 2013 bills.

Right to itemize. Section 4 of House Substitute for Senate Bill 83 amended K.S.A. 79-32,118 to state that an individual may elect to itemize (under the conditions in K.S.A. 79-32,120) instead of taking the Kansas standard deduction.

Phase-down. Section 2 of House Bill 2059 amended K.S.A. 79-32,120 to phase down the Kansas itemized deduction as a percentage of federal itemized deductions (other than personal exemptions):

• 70% for 2013
• 65% for 2014
• 60% for 2015
• 55% for 2016
• 50% for 2017 and later

Adjustments and exceptions. The total is reduced by state and local income taxes deducted federally and by certain depreciation deductions. Two exceptions: (1) charitable contributions (IRC 170) are not subject to the phase-down, and (2) beginning in tax year 2014, wagering losses (IRC 165(d)) can no longer be claimed as a Kansas itemized deduction.

What this means for you

Individuals who itemize

• You can still itemize on the Kansas return, but the deductible percentage steps down from 70% (2013) to 50% (2017), and state/local income taxes are excluded.

Charitable donors and gamblers

• Charitable contributions escape the phase-down; wagering losses are no longer deductible from 2014.

Common questions

Can I still itemize in Kansas? Yes -- you may elect the Kansas itemized deduction instead of the standard deduction.

What percentage is allowed? 70% (2013) down to 50% (2017 and later) of federal itemized deductions.

What is excluded from the base? State and local income taxes deducted federally and certain depreciation.

What about charitable gifts and wagering losses? Charitable contributions are not phased down; wagering losses are disallowed from 2014.

Citations and references

• K.S.A. 79-32,118 -- election to itemize, amended by Section 4 of 2013 House Substitute for Senate Bill 83.
• K.S.A. 79-32,120 -- the itemized deduction phase-down, amended by Section 2 of 2013 House Bill 2059.
• Replaces the revoked Notice 12-07.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 13-11

Original ruling text

Policy & Research Phone: 785-296-3081
915 SW Harrison St FAX: 785-296-7928
Topeka KS 66612-1588 www.ksrevenue.org
Nick Jordan, Secretary Department of Revenue Sam Brownback, Governor
Richard Cram, Director

                                      NOTICE 13-11

                     ITEMIZED DEDUCTIONS FOR INDIVIDUAL INCOME TAX
                                     (July 1, 2013)

          [Note: This Notice replaces Notice 12-07 which has been revoked.]

  During the 2013 Legislative Session House Substitute for Senate Bill 83 and House Bill

2059 were passed and signed into law. Each of these enactments addressed deductions for
individuals for Kansas income tax purposes.

  K.S.A. 79-32,118 deals with the type of deduction that can be claimed by an individual on

their Kansas income tax return. Prior to amendment by House Sub for SB 83 the statute
provided:

       Commencing in tax year 2013, the Kansas deduction of an individual shall be
 such individual's Kansas standard deduction.

 Section 4 of House Sub for SB 83 amends K.S.A. 79-32,118 to specifically recognize that

an individual can elect to itemize their deductions on their Kansas return. The new language
provides:

      Commencing in tax year 2013, The Kansas deduction of an individual shall be
 such individual's Kansas standard deduction unless such individual elects to deduct
 such individual's Kansas itemized deductions under the conditions set forth in K.S.A.
 79-32,120, and amendments thereto.

  K.S.A. 79-32,120, which expressly allows itemized deductions, was amended in Section 2

of HB 2059. The new language provides for an overall phase-down of the amount of the
itemized deduction to be allowed. The phase-down begins with tax year 2013, when itemized
deductions are limited to 70% of the amount used on the federal return, (but excluding state and
local income tax imposed or paid, as indicated in K.S.A. 79-32,120(b)) and continues through
tax year 2017 when only 50% of the amount used on the federal return (excluding state and local
income tax imposed or paid, as indicated in K.S.A. 79-32,120(b)) may be used for Kansas
purposes.

 There are two exceptions to the phase-down provisions. First, charitable contributions are

not subject to the phase-down. Second, beginning in tax year 2014 wagering losses can no
longer be claimed as an itemized deduction.

The new language of the statute provides as follows:

(a) (1) If federal taxable income of an individual is determined by itemizing
deductions from such individual's federal adjusted gross income, such individual may
elect to deduct the Kansas itemized deduction in lieu of the Kansas standard
deduction.
(2) For the tax year commencing on January 1, 2013, the Kansas itemized
deduction of an individual means 70% of the total amount of deductions from federal
adjusted gross income, other than federal deductions for personal exemptions, as
provided in the federal internal revenue code with the modifications specified in this
section.
(3) For the tax year commencing on January 1, 2014, the Kansas itemized
deduction of an individual means 65% of the total amount of deductions from federal
adjusted gross income, other than federal deductions for personal exemptions, as
provided in the federal internal revenue code with the modifications specified in this
section.
(4) For the tax year commencing on January 1, 2015, the Kansas itemized
deduction of an individual means 60% of the total amount of deductions from federal
adjusted gross income, other than federal deductions for personal exemptions, as
provided in the federal internal revenue code with the modifications specified in this
section.
(5) For the tax year commencing on January 1, 2016, the Kansas itemized
deduction of an individual means 55% of the total amount of deductions from federal
adjusted gross income, other than federal deductions for personal exemptions, as
provided in the federal internal revenue code with the modifications specified in this
section.
(6) For tax years commencing on and after January 1, 2017, the Kansas
itemized deduction of an individual means 50% of the total amount of deductions
from federal adjusted gross income, other than federal deductions for personal
exemptions, as provided in the federal internal revenue code with the modifications
specified in this section.
(b) The total amount of deductions from federal adjusted gross income shall be
reduced by the total amount of income taxes imposed by or paid to this state or any
other taxing jurisdiction to the extent that the same are deducted in determining the
federal itemized deductions and by the amount of all depreciation deductions claimed
for any real or tangible personal property upon which the deduction allowed by
K.S.A. 2012 Supp. 79-32,221, 79-32,227, 79-32,232, 79-32,237, 79-32,249, 79-
32,250, 79-32,255 or 79-32,256, and amendments thereto, is or has been claimed.
(c) The provisions of this section that provide for a reduction in the total
amount of deductions from federal adjusted gross income shall not apply to
contributions that qualify as charitable contributions allowable as deductions in
section 170 of the federal internal revenue code, and amendments thereto.
(d) Notwithstanding any provision of this section to the contrary, for taxable
years commencing after January 1, 2013, the total amount of deductions from federal
adjusted gross income shall be reduced by the total amount of wagering losses

 claimed as an itemized deduction in section 165(d) of the federal internal revenue
 code, and amendments thereto.

                               Taxpayer Assistance

Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.org. If you have questions about this Notice, please contact:

                           Taxpayer Assistance Center
                          Kansas Department of Revenue
                          915 SW Harrison St., 1st Floor
                            Topeka, KS 66612-1588
                              Phone: 785-368-8222
                               Fax: 785-291-3614