Kansas Income Taxes Increase for Individuals & Businesses
As Kansas faced a budget deficit this year, they initiated income tax changes that are retroactive to January 1, 2017, in order to bridge the gap. So, as you prepare for filing taxes in the next several months you should be aware of the impact of these changes. The following is a brief summary of how the new tax law affects individual and business income taxes. Examples are provided, but keep in mind that they serve only as a high-level guide and actual impacts to you could vary based upon many other variables in your tax return.
The highest tax rate has increased from 4.6% to 5.2% for 2017. The tax rate will increase once again in 2018, with the highest income tax rate set at 5.7%.
For a married couple filing jointly with adjusted gross income of $100,000, their Kansas income tax bill increases by roughly $300 in 2017.
The impact to businesses is more profound. Pass-through business entities, such as Limited Liability Companies (LLC’s), were previously exempt from state income tax. They will now be subject to the new income tax rates. For a married couple operating their own pass-through LLC business with adjusted gross income of $100,000, their Kansas income tax bill increases by roughly $3,800.
Planning for the Income Tax Change
The Kansas Department of Revenue provides a ‘Tax Calculator’ to show your tax liability under the new versus old laws (KS DOR Tax Calculator). The tax calculator is geared more towards individuals than businesses.
To estimate the impact for pass-through businesses, you can use this calculator but your tax change is really reflected on the line labeled, ‘Tax Liability – New Law TY 2017’. This is due to the fact that these businesses had no tax liability under the old laws.
If you determine that you need to make an estimated tax payment to keep up with the higher tax rates, you can do that online at KS Est Tax Payment