Taxes & Fees

Application and Recording Fees

At the time of filing articles of incorporation, each domestic corporation (any corporation organized under Kansas law) pays an application and recording fee of $90 to the Secretary of State.

A corporation classified as foreign (any corporation organized under the laws of another state) must pay a filing fee of $115 to the Secretary of State to obtain a certificate of authority to do business in Kansas.

Corporate Income Tax

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 opt to 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 be carried forward to each of the ten years following the taxable year of the net operating loss.

Individual Income Tax

Nonresidents pay taxes equal to the amount computed as though they were residents. The result is multiplied by the ratio of modified Kansas-source income to Kansas adjusted gross income.

Franchise Tax

Corporations in Kansas are assessed an annual franchise tax at the rate of 0.125 percent of the total net worth. In addition, an annual franchise fee of $55 must be paid to the Secretary of State's office.

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 and taxed separately. All property is appraised at its fair market value.

The rate of tax depends on the levy of the local taxing district and will vary within the state by location. Both real and tangible personal property are assessed by the county assessor in the taxing district in which the property is located. Taxes are paid to the county treasurer.

Property taxation is administered by the Division of Property Valuation of the Department of Revenue together with local taxing officers. Public utilities are treated separately for property tax purposes. Utility property is assessed and apportioned by local taxing districts by the Division of Property Valuation.

Aircraft used regularly and exclusively in the conduct of business are exempted from property or ad valorem taxes.

Property Tax Formula for Commercial and Industrial Property

1. Appraised Value X Classification Rate = Assessed Value
2. (Assessed Value/1000) X Mill Levy Rate = Property Tax

Major Classes of Property:

Intangible Property Tax

Cities, counties, and townships are allowed to levy taxes on intangible property. Counties may tax such property at a rate of up to 0.75 percent, and cities or townships may impose an intangible property tax of up to 2.25 percent. The total intangible property tax burden of any individual or business cannot exceed three percent. In practice, most local governments have no tax on intangible property. One-third of the counties in Kansas, less than one-fifth of the cities, and about one-third of the townships impose such a tax. There is no Intangible Property Tax assessed in Topeka/Shawnee County.

Sales and Use Tax

The Kansas sales and use tax is 5.3 percent of the sale price of tangible personal property and taxable services sold at retail to the consumer. Cities and counties may collect an additional maximum of one percent on each of the base rates noted above. In some cases, cities and counties can receive permission from the Kansas Legislature to exceed the one percent limit. The current sales tax rate for the City of Topeka is: 5.3% state, plus 1% city, .50% county, and .65% Washburn University for a total of 7.45%.

Unemployment Insurance

If an employer already has a facility in Kansas and has established an experience rating, the employer elects the same tax rate for any new facility built in Kansas. New companies locating in the state receive an entry rate based on the type of business (see chart). After three years, when original liability is established before July 1, the employer will have a tax rate computed with experience rate factors. When liability is established after June 30, the employer will have a computed rate after four years. The minimum rate for positive balance employers is 0.08 percent. The maximum rate is 5.4 percent, while the rate range for employers with underpaid accounts is 5.6 percent to 7.4 percent. The taxable wage base for Kansas employers is $8,000 per year.

Employees dismissed without misconduct are eligible to receive benefits after a one-week waiting period. Employees discharged for misconduct are disqualified from receiving benefits from the date the discharge occurred, until they return to work and earn three times the weekly benefit amount of their claim.

Unemployment Insurance for Selected States

Kansas Shared Work Unemployment Insurance

The shared work unemployment insurance program is designed to help both employers and employees by:

• Allowing an employer to divide the workday among a group of affected employees in lieu of a layoff
• Allowing employees to receive a portion of their unemployment benefits while working reduced hours

Kansas Workers' Compensation

The Kansas workers' compensation program has undergone major changes over the past few years. In addition to a 1993 reform that resulted in a dramatic annual decrease in rates, Kansas also switched to a new rating structure in 1993, allowing workers' compensation insurance coverage to be provided by private insurance companies on a competitive basis. These changes, combined with new rates effective January 1, 2001, have lowered employers' costs by an estimated $131 million since 1995.

Kansas Workers' Compensation Insurance Rates by Industry

Comparitive Workers' Compensation Costs for Manufacturing

Workers' Compensation Premium Rate Ranking

Premiums for workers' compensation insurance are determined by applying the rate for occupational classes and experience ratings for individual firms. Premiums are calculated per $100 of annual employee wages. Workers' compensation premium rates in Kansas are eighth lowest in the nation.

Kansas employers may secure workers' compensation insurance for employees in one of three ways. They may obtain insurance from private insurance companies authorized to transact workers' compensation insurance in Kansas, apply to become self-insured, or become a member of a group-funded workers' compensation insurance pool.

The maximum weekly benefit is two-thirds of the employee's average weekly wage at the time of the injury, up to a maximum of $467 per week.