Kansas sales, personal income tax revenue surpass October projections

Democratic Gov. Laura Kelly and House Speaker Dan Hawkins, a Wichita Republican, offer contrasting perspectives on implications of an October surge in Kansas state government sales and individual income tax collections amid a crash in corporate income tax receipts. (Photo by Tim Carpenter/Kansas Reflector)

TOPEKA — Gov. Laura Kelly said overall state tax collections in October exceeded the monthly estimate despite a sharp drop in corporate income tax revenue that ought to serve as a warning to lawmakers assembling budget plans ahead of the 2026 session.

The state took in $695 million during October, which was 7.2% or $47 million above the level projected by state economists and budget analysts. The monthly total was 4.1% greater than October 2024.

The monthly report from the Kansas Department of Revenue showed state sales tax and individual income tax payments outperformed prognostications issued in April.

The state’s individual income tax revenue totaled $367.4 million in October. That was $67 million, or 22.5%, above the official projection. Kansas took in 17.9% more in individual income taxes this October compared to one year ago.

The state’s share of retail sales tax receipts in Kansas hit $289.5 million in October, which was 1.2% or $3.5 million above the anticipated mark. That constituted a decline of 1.7% from October 2024.

Meanwhile, the state received $15.9 million in corporate income tax last month. That was $24.1 million or 60% below the target.

“While this month’s tax collections indicate some good news, corporate income tax collections have significantly missed the mark, which is concerning,” Kelly said. “My administration will continue to monitor revenues and prioritize fiscal responsibility as I craft my fiscal year 2027 budget proposal.”

On Nov. 13, the state’s revenue estimators scheduled a meeting to update the Kansas revenue forecast. Those numbers would be available to the Democratic governor and Republican-led Legislature as they worked on separate budget bills for the fiscal year starting July 1, 2026.

House Speaker Dan Hawkins, a Republican running for state insurance commissioner, said the October revenue report illustrated effectiveness of work by the Republican majority in the Legislature to tweak the state budget and offer tax relief. In a statement, Hawkins made a connection between growth in state tax revenue and the GOP’s handling of the state’s financial affairs.

“Legislative Republicans have been laser-focused on putting money back in the pockets of Kansans,” Hawkins said. “In just the first three months of the fiscal year, total state receipts are up more than $100 million.”

Hawkins said Republicans in Kansas “remain committed to showing the results that can be achieved with level-headed and carefully crafted policy” instead of “grandstanding” by Kelly and other Democrats.

For several years, Kelly expressed concern that Hawkins and Senate President Ty Masterson were leading the Legislature toward a financial cliff. She said the Legislature’s revenue and expenditure adjustments produced a state budget that would spend $300 million to $700 million more than the state collected in taxes. The result, she said, was erosion of the state’s cash reserve of about $3 billion.

Kelly, who is nearing completion of her second term and leaves office in January 2027, said the budget “put together last year by the Legislature is not sustainable over time.”