First Stop Clearinghouse serves as a link between business owners and resources available through state government and provides a central point of contact to streamline the business startup process. A NetWork Kansas referral coordinator will connect you with resources within the state that are involved in all aspects of starting a business, including legal structure, employment, taxes, licensing and some federal requirements. Contact us at:
- Kansas Center for Entrepreneurship (dba NetWork Kansas)
- 1845 Fairmount, Box 202
- Wichita, KS 67260
- Phone: 877.521.8600
- Email: firstname.lastname@example.org
- Website: www.networkkansas.com
Corporate Income Tax
For corporations whose facilities are solely within state boundaries, the tax is 4% of net income. In addition, net income in excess of $50,000 is subject to a 3.35% surtax. For those corporations having facilities both inside and outside the state, the net income attributed to the Kansas operation is based upon the percentage of the corporation’s business located in Kansas. A business’ tax obligation is determined by a “three-factor formula” using the proportion of sales, property, and dollar payroll attributable to the Kansas facility. Corporations may use a “two factor” (sales and property) apportionment formula to calculate tax liability if the payroll factor for a taxable year exceeds 200% of the average of the property and sales factors. Also, state law allows net operating losses to he carried forward to each of the ten years following the taxable year of the net operating loss.
Employer contribution rates in Kansas range from 0.05% to 4.27% (for positive balance employers) on the first $8,000 in wages paid annually to an employee. The tax range for negative balance employers has been established as 5.6% to 7.4%. Subject to eligibility, there is a one-week waiting period prior to a person’s receiving any unemployment benefits. The maximum benefit is $351 per week and the minimum benefit is $87.
The contribution rate assigned to each employer is based on the experience rate of the employer. If an employer already has a facility in Kansas and has established shed an experience rating, the employer must elect the same tax for a new facility. Companies moving to Kansas with an assigned experience rate from another state retain that rate in Kansas.
New employers in Kansas are assigned an entry contribution rate, which varies with the type of industry. This rate is applicable to new employers until there have been at least 24 consecutive months immediately preceding the rate computation date of June 30. The 24 month entry period is the minimum period throughout which benefits may be charged against such employer’s account. Once eligibility has been established for an experience rating, the employer is awarded an adjusted rate.
Premiums for worker’s compensation insurance in Kansas are determined by applying the rate for a specific occupation, per $100 payroll, to the annual wage per employee.
Businesses can obtain worker’s compensation insurance from private insurance companies or, upon application, by becoming self insured. Under the new Kansas law, groups of employers who are engaged in dissimilar types of businesses may now form a self-insurance pool through trade associations.
The current maximum weekly benefit is 75% of the state average weekly wage for a specific occupation. Worker’s compensation benefits cannot exceed $319 per week.
Sales & Use Tax
The Kansas sales and use tax is 6.5% of the sale price of tangible personal property amid taxable services sold at retail to the consumer. A tax of 2.5% is applied to the gross receipts from all sales of electricity, gas, amid water used in the production of products, the irrigation of crops, and the provision of services which are not reusable or resaleable. The service of installing or applying tangible personal property is taxable at the same rate. Cities and counties nay collect an additional maximum of 1% on each of the base rates noted above.
Sales tax paid on the purchase of machinery, equipment amid certain other tangible property may be exempted if the applicant business qualifies for job and investment tax credits and is located within a state designated Enterprise Zone. (K.S.A. 79-36t)6) Companies that qualify for the High Performance Business Incentive Program are eligible to receive this exemption without being tied to the job creation requirement. This exemption extends to manufacturing machinery and equipment as well as to any quality control and pollution control equipment installed.
All sales of manufacturing machinery amid equipment are exempt from sales taxes Also, machinery and equipment purchased primarily for use in the assembly, processing, finishing, storing, warehousing, or distribution of tangible personal property intended for resale.
Find out more about sales tax in Kansas on the Kansas Department of Revenue website.
Inventory Tax Exemption
All merchants’ and manufacturers’ inventories have been exempt from property taxes by constitutional amendment since 1989.
Tangible Property Tax – Both real and tangible personal property are subject to ad valorem taxation by cities, counties and special taxing districts. Intangible property is classified amid taxed separately. All property is appraised at its fair market value. The rate of tax depends on the levy of the local taxing district. Both real and tangible personal property is assessed by the county assessor in the taxing district in which the property is located. Taxes are paid to the county treasurer.
Property Tax Base
Residential: 11.5% of market.
Commercial-Industrial: 25% of market.
Find more information about property tax by contacting the County Appraiser.