Lawmakers chopping previous 6.5% tax on groceries to zero on Jan. 1, 2025
TOPEKA — Gov. Laura Kelly said the next scheduled reduction in the state’s sales tax on groceries Jan. 1 would cut the rate in half to 2% and enable shoppers in Kansas to avoid $150 million annually in food costs.
The agreement embraced by the 2022 Legislature and the governor established a three-year approach that included a Jan. 1, 2023, drop in the state sales tax on groceries from 6.5% to 4%. The next step on Jan. 1 moves the state’s assessment to 2% on food, food ingredients and certain prepared foods. That would trigger a reduction in state tax collections of $12.5 million per month.
Kansas would join the majority of states by exempting groceries from state sales tax collections on Jan. 1, 2025. Local government sales taxes would still apply to groceries.
“By taking a middle-of-the-road approach,” Kelly said, “we have been able to continue putting money back in the pockets of every Kansan.”
In 2021, Kelly recommended the Republican-led Legislature pass a bill abandoning the state sales tax on groceries. She again called for sacking of the state’s sales tax on food in 2022. The Legislature didn’t bite. Lawmakers, pressured to act in an election year, agreed to the stair-step idea.
Political ping pong
In 2022, the Senate unanimously voted for the food sales tax reduction plan. An overwhelming majority of House members agreed. Kelly signed the bill.
The step down from 6.5% to 4% saved consumers shopping for groceries in Kansas an estimated $187 million during 2023. The compounding influence of the previous and upcoming decline to 2% would provide consumers an estimated $500 million in sales tax reductions by the end of 2024, Kelly said.
During a bruising recession in 2010, Democratic Gov. Mark Parkinson agreed to raise the statewide sales tax from 5.3% to 6.3% to prevent cuts in core social service and education programs. That law promised to draw the rate back to 5.7% after three years.
In 2012, Republican Gov. Sam Brownback signed a bill aggressively reducing the state’s income tax, especially for some business owners. It was an experiment in supply-side economics inspired by conservative consultant Arthur Laffer. A soft economy and te refusal of Kansas politicians to reduce state spending to match tax revenue losses led to years of painful budget problems.
Brownback leaned harder on the state sales tax in an attempt to sustain his quest to eliminate the state’s income tax. In 2013, he signed legislation repealing the 2010 law that promised to shrink the state sales tax rate to 5.7%. Instead, Brownback reset the rate at 6.15%. It allowed him to include in the legislation provisions that would gradually lower the Kansas income tax.
“It has been difficult,” Brownback said at that time. “We’re on a path to growth. Now we’re set.”
Shopping for a deal
In 2015, however, the state government continued to be plagued by revenue shortfalls. Brownback returned to the well. He secured an increase in the state sales tax rate to 6.5%.
Brownback’s income tax strategy was repealed by the GOP-controlled House and Senate in 2017 over the Republican governor’s veto. The state’s sales tax, including on groceries, was left unchanged.
The 2019 Legislature passed a bill that would have slashed state tax revenue by at least $500 million over three years. It included a reduction in the food sales tax. Kelly vetoed that bill, arguing it would jeopardize the state’s financial health in a way reminiscent of Brownback policy.
In 2022, Kelly proposed immediate elimination of the state sales tax on groceries and the Legislature offered the three-year phase out associated with food purchases. The state sales tax for non-grocery purchases has stayed at 6.5%, but that plan cut the food sales tax to 4% on Jan. 1, 2023. It is to be rolled back to 2% on Jan. 1, 2024, and decline to zero on Jan. 1, 2025.
None of this maneuvering at the Capitol altered city or county sales tax rates, which also apply to grocery purchases in Kansas. In Missouri, that state’s sales tax on groceries is 1.2%. Oklahoma charges a 4.5% statewide sales tax on groceries. Nebraska and Colorado exempt groceries from the state sales tax.
Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.
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