Kansas Business Taxes at a Glance
Kansas simplified its individual income tax in 2024, moving to two brackets and exempting all Social Security benefits. The state sales tax on food has been eliminated. Banks and financial institutions pay a separate privilege tax. In the Kansas City area, many Kansas residents also deal with Missouri's city earnings tax. BOMCAS helps Kansas individuals and businesses file correctly under these rules.
Individual Income Tax
Starting with the 2024 tax year, Kansas taxes individual income under two brackets, replacing the earlier three-bracket structure. The same legislation increased the standard deduction and personal exemption and fully exempted Social Security benefits from Kansas income tax, regardless of income. Kansas starts from federal adjusted gross income with its own adjustments.
We prepare Kansas returns, apply the Social Security exemption and other subtractions, and handle part-year and nonresident filings.
Living in Kansas, Working in Kansas City, Missouri
Many people live in Johnson County or Wyandotte County, Kansas, and work in Kansas City, Missouri. Missouri taxes their wages as nonresidents, and Kansas City, Missouri, charges an earnings tax on wages earned in the city, including by nonresidents. Kansas gives a credit for income tax paid to Missouri, but the city earnings tax is a separate cost.
Remote and hybrid workers can generally reduce the Kansas City earnings tax for days worked outside the city, with records and the city's refund process. We prepare Missouri nonresident returns, Kansas returns with credits, and city earnings tax refund requests.
Corporate Income Tax and Privilege Tax
Corporations active in Kansas owe corporate income tax on the portion of income apportioned to the state. Banks, trust companies, and savings and loan associations pay a privilege tax instead, with a normal tax and a surtax on income above a threshold.
Partnerships and S corporations file Kansas returns, and Kansas offers an elective pass-through entity tax with credits for owners. We prepare the entity returns and model whether the election helps the owners.
Sales and Use Tax
Kansas's sales tax combines a state rate with city and county taxes. The state rate on food and food ingredients was reduced in steps and eliminated, but local taxes on food still generally apply. Kansas taxes some services, including certain repair, installation, and service of tangible property, and construction labor on some projects.
Businesses need a sales tax registration and file regularly. Remote sellers above Kansas's threshold must register. We register businesses, track rates by location, update food classifications, and file returns.
Agriculture
Agriculture is central to Kansas, including wheat, sorghum, cattle, and feedlots. Farm and ranch clients need:
- Livestock and grain inventory records
- Federal farm reporting, including income averaging and program payments
- Equipment depreciation schedules
- Records for agricultural sales tax exemptions
Aviation and Manufacturing in Wichita
Wichita has long been a center for aircraft manufacturing and suppliers. These businesses need inventory and job costing, fixed asset records, and payroll for skilled workforces. Kansas also offers credits and exemptions for some manufacturing investment. We provide bookkeeping and tax support for manufacturers and suppliers.
Oil, Gas, and Mineral Royalties
Kansas imposes a severance tax on oil and gas production, generally withheld by operators and purchasers before royalty and working interest owners are paid. Many Kansas mineral owners live elsewhere and receive royalties from Kansas wells, which is Kansas-source income that may require a nonresident return. We reconcile royalty statements, track severance tax and depletion, and prepare Kansas returns for resident and nonresident owners.
Property Tax
Kansas property tax is assessed by counties, with different assessment rates for residential, commercial, and agricultural property. Agricultural land is valued based on its productive use rather than market value. New business machinery and equipment acquired after 2006 is generally exempt. We keep fixed asset records that support property reporting and federal depreciation.
Payroll Across the State Line
Kansas employers withhold state income tax and report unemployment insurance to the Kansas Department of Labor. Employers with workers in Missouri or Kansas City, Missouri, need to withhold for the right state and city. We process payroll, file the periodic state reports, and reconcile them to the general ledger.
Wheat, Aircraft, Banks, and Pipelines
- Agriculture and feedlots: farm reporting and exemptions
- Aviation and manufacturing: inventory, fixed assets, and credits
- Banking and financial services: privilege tax support and multistate payroll
- Logistics and distribution: apportionment and sales tax on equipment
- Energy: oil, gas, and wind, with severance tax and royalty accounting
Retiring in Kansas
Kansas now exempts all Social Security benefits, and it also exempts some public pensions, such as Kansas public employee retirement benefits, federal civil service annuities, and military retirement. Most private pensions and IRA distributions remain taxable. Retirees moving into Kansas file part-year returns in the year of the move. We help them identify which income is exempt and plan withholding or estimated payments.
Books That Track Food Sales and Work Locations
Kansas bookkeeping should separate food and general sales for sales tax, track wages by work location for Missouri and Kansas City, and record new equipment for property tax exemptions. Setting up accounts this way at the start saves rework when the returns are prepared.
Contact BOMCAS About Kansas
Commuters between Kansas and Kansas City, Missouri, farmers and royalty owners, and manufacturers in Wichita can contact BOMCAS for a remote review of their Kansas filings. Local pages for Kansas cities and services are planned under this section. See the BOMCAS home page and our United States services for more. This page provides general information only.
Talk to BOMCAS About Your Kansas Taxes
Have a question about your Kansas filings, payroll or bookkeeping? Contact BOMCAS or use the contact form below, and we will get back to you as soon as possible. You can also browse all United States services.