Don't HR Alone #16 - KS Income Tax, NV Minimum Wage, MI Interest Rates, and the ACA
Kansas legislature overrides veto, enacts income tax rate increase — KANSAS — Withholding and Reporting
The Kansas Legislature has overridden Gov. Sam Brownback’s veto of a bill that makes a number of changes to personal income taxes, including repealing the exemption for non-wage business income and increasing personal income tax rates.
Personal income tax rates. Under the legislation, personal income tax rates would be increased beginning in tax year 2017 by replacing the two-bracket system with a three-bracket system. For married individuals filing joint returns with taxable income above $60,000 and all other filers with taxable income above $30,000, a top bracket is created with a tax rate of 5.2% for tax year 2017 and 5.7% for tax year 2018 and all tax years thereafter. The bottom brackets are increased to 2.9% (previously, 2.6%) and 4.9% (previously, 4.6%) for tax year 2017 and further increased to 3.1% and 5.25% for tax year 2018 and all tax years thereafter. The legislation also repeals additional formulaic provisions that would have provided for rate reductions in certain future years based on growth in selected State General Fund tax receipts.
Business income exemption. Effective for tax year 2017, the legislation repeals the exemption for certain non-wage business income (income reported by pass-through entities and sole proprietorships on federal Schedules C, E, and F and lines 12, 17, and 18 on federal Form 1040) by eliminating the addback of certain business losses and the corresponding subtraction for specified business profits that the taxpayer reported for federal income tax purposes.
Child and dependent care credit. The legislation restores a child and dependent care tax credit that had been repealed in 2012 in an amount equal to 12.5% of the allowable federal amount for tax year 2018, and then incrementally increased to 18.75% for tax year 2019, and 25% for tax year 2020 and all tax years thereafter.
Itemized deductions. Under the legislation, personal income taxpayers are permitted to claim 50% of medical expenses currently allowed as itemized deductions under federal law for tax year 2018 as an itemized deduction. This amount increases to 75% of the federal allowable amount for tax year 2019 and to 100% for tax year 2020 and thereafter. Itemized deductions for mortgage interest and property taxes paid are also increased from 50% of the federal allowable amounts to 75% for tax year 2019 and to 100% beginning in tax year 2020.
Low-income exclusion threshold. Under the legislation, the low-income exclusion threshold is reduced from $12,500 to $5,000 for married taxpayers filing joint returns and from $5,000 to $2,500 for single filers for tax years beginning in 2018 and all tax years thereafter.
Other adjusted gross income modifications. Effective for tax years beginning after 2016, the additions to federal adjusted gross income required by taxpayers computing Kansas personal income tax liability for the amount of any deduction for domestic production activities under Code Sec. 199; self-employment taxes under IRC §164(f); any deduction for pension, profit-sharing, and annuity plans of self-employed individuals under Code Sec. 62(a)(6); and any deduction for health insurance under Code Sec. 162(l) are repealed. Special subtraction modification provisions relating to net gains from certain livestock and Christmas tree sales are also repealed. Effective for tax years beginning after 2016, the federal net operating loss deduction claimed on the taxpayer’s federal income tax return is no longer required to be added back to federal adjusted gross income in computing Kansas adjusted gross income.
(S.B. 30, Laws 2017, vetoed by Governor Brownback on June 6, 2017, veto overridden by Kansas Senate and House of Representatives on June 6, 2017, effective July 1, 2017 except as noted above.)
Governor Sandoval vetoes minimum wage bill — NEVADA — State legislation
On June 8, while signing 70 bills into law at the end of the legislative session, Nevada Governor Brian Sandoval vetoed a minimum wage bill that would have increased the minimum wage by 75 cents each year for five years or until the minimum wage reached $12 or more ($11 if the employer offered health insurance). SB 106, which was passed by the Senate on a 12-9 vote May 17 and by the House on a 27-15 vote June 5, would have been effective January 1, 2018.
In his veto message, Governor Sandoval cited the state’s growing economy as one reason for the veto, noting that at one point during the Great Recession, Nevada "led the nation in unemployment, bankruptcies, and foreclosures." Now the state is "among the leading states for economic growth."
The governor said that "SB 106, although commendable in its attempt to extend high wages for Nevada workers, would place a significant burden on the State’s small business employers at a time when they are emerging from a downturn that cost hundreds of thousands of jobs and closed the doors of businesses across the State." He also noted that "Senate Joint Resolution 6, a proposal to increase the minimum wage through the approval by Nevada’s voters of a constitutional amendment, was approved during the Legislative Session and will return for further consideration in 2019. Thus, the voters will decide if an increase in the minimum wage is appropriate if approved again by the Legislature in 2019."
Michigan interest rate increased for second half of 2017 — MICHIGAN — Interest Rates
The interest rate applicable to amounts of Michigan tax determined by the Michigan Tax Tribunal to be unlawfully paid or underpaid is increased to 4.7% for the period July 1, 2017, through December 31, 2017. The interest rate was 4.5% for the period January 1, 2017, through June 30, 2017. The tribunal has exclusive jurisdiction over Michigan property tax matters and concurrent jurisdiction over matters involving all other Michigan taxes.
The interest rate is determined twice a year for the periods of January 1 to June 30 and July 1 to December 31. The interest rate is established as the adjusted prime rate plus 1%. The adjusted prime rate is the average predominant prime rate quoted by not fewer than three commercial banks to large businesses during a preceding six-month period as determined by the Michigan Department of Treasury. (Bulletin No. 11 of 2017, Michigan State Tax Commission, June 6, 2017.)
HHS seeks comments on reducing ACA regulatory requirements for individual and small group markets — COMMENT OPPORTUNITY
The Department of Health and Human Services (HHS) has issued a Request for Information (RFI) seeking recommendations and input from the public on how to create a more flexible, streamlined approach to the regulatory structure of the individual and small group markets. HHS’ goal through this process is to identify and eliminate or change regulations that are outdated, unnecessary, or ineffective; impose costs that exceed benefits; or create inconsistencies that otherwise interfere with regulatory reform initiatives and policies.
Background. On January 20, 2017, President Trump issued Executive Order 13765, “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” to minimize the unwarranted economic and regulatory burdens of the Patient Protection and Affordable Care Act (ACA).
Pursuant to the president’s order, HHS has taken initial steps to reduce burden, improve choices and stabilize the insurance market, including publishing the Market Stabilization Final Rule on April 18, 2017. HHS now seeks input from the public on other changes within its authority and consistent with the law to further achieve these aims.
Type of information requested. HHS is interested in soliciting public comments about changes to existing regulations or guidance, or other actions within HHS’s authority, that could further the following goals with respect to the individual and small group health insurance markets:
1. empowering patients and promoting consumer choice;
2. stabilizing the individual, small group, and non-traditional health insurance markets;
3. enhancing affordability, and
4. affirming the traditional regulatory authority of the States in regulating the business of health insurance.
How to send comments. Comments can be submitted in one of three ways: (1) electronically via http://www.regulations.gov; (2) by regular mail to the following address: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9928-NC, P.O. Box 8016, Baltimore, MD 21244-8016; (3) by express or overnight mail to :Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9928-NC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. Comments must be submitted by July 12, 2017.
SOURCE: 82 FR 26885, June 12, 2017.
