Like Colorado, Nebraska, Oklahoma, and the other states that border it, Kansas has an income tax. The rate ranges from 3.1% to 5.7% of a person’s income. This number is pretty middle-of-the-road when it comes to income tax, especially for the region.
Colorado, for instance, has a flat income tax rate of 4.4%. Oklahoma has a max income tax rate of 4.75%. And Nebraska’s income tax goes up to 6.84%.
Along with these graduated income tax laws, the Sunflower State levies various sales and corporate taxes, too.
If you’re starting a business in Kansas, here’s what you need to know.
Kansas Payroll Taxes Overview
Overwhelmed by all the payroll details you need to learn as a payroll manager in Kansas? This overview gives you a starting point for making sure you pin everything down.
Let’s explore the tax and wage laws you need to know about:
- State Income Tax: Kansas has a graduated income tax rate that ranges from 3.1% to 5.7% of taxable income. We’ll dive deeper into the basics in a moment.
- Local Taxes: Along with a state sales tax of 6.5%, cities in Kansas can charge local taxes of up to 3%. Counties can charge up to 2.25%. Businesses that sell personal property and taxable services must collect sales tax. They’re also responsible for sending the taxes to the relevant county or city department.
- Corporate Income Tax: Kansas has a corporate income tax rate that ranges from 4 to 7%. The tax only applies to corporations—not to other business models like sole proprietorships, limited liability companies, and partnerships.
- Minimum Wage: The Kansas minimum wage is $7.25, the same as the federal minimum wage. The only notable exception is that employees covered under the Fair Labor Standards Act must be paid the federal minimum wage.
- State Unemployment Tax: Kansas has a state-operated unemployment insurance program. Employers are taxed on the first $14,000 of an employee’s wages. Each employer gets a different tax rate based on past contributions to the State Unemployment Tax Act (SUTA) fund.
- Workers Compensation: Most employers must carry worker’s compensation insurance. The exceptions include certain agricultural employers or employers with a gross annual payroll of $20,000 or less.
Kansas law does not require things like meal breaks or paid leave. Offering benefits like PTO and FTO is up to employers, who may choose to offer them to attract better job candidates. Of course, employers have to follow federal FMLA laws for unpaid leave for qualifying circumstances.
Remember that the details above only cover state-specific laws. You’ll still need to pay federal taxes and follow federal overtime and labor laws.
Registering for Kansas Payroll
There are three places you’ll need to register when you start a business and get ready to run payroll in Kansas:
- Kansas Secretary of State: All Kansas businesses must register, regardless of whether they have employees. You’ll need to create a KanAccess account and file business formation documents.
- Kansas Department of Revenue: Businesses must register with the Department of Revenue when they start a business, even if they have no employees. You’ll create an account using the Department of Revenue’s Customer Service Center.
- Kansas Department of Labor: Employers must register with the Department of Labor when they hire their first employee. This account will allow you to do a number of labor-related duties. Like file a Status Report (K-CNS 010). And apply for a state unemployment tax number. And file your Quarterly Wage Report & Unemployment Tax Return (K-CNS 100).
If you want a little extra guidance, the Sunflower State has a service called the Kansas Business One Stop. The service helps you understand the steps you need to take—and the forms you need to fill out—for your Kansas business.
You can use its Business Setup Wizard to enter details about your company. The wizard will create a quick startup guide based on your answers.
The state also offers Business Starter Kits that sort the state’s business requirements by industry. There are kits for all sorts of industries, from childcare and healthcare to distilleries and restaurants.
Each kit features links to relevant permits, forms, and the Kansas Business Tax Express page.
Calculating Kansas State Payroll Taxes
Now that you know how to get your business up and running, it’s time to talk about calculating those payroll taxes. How do you know how much to withhold if there’s a graduated income tax rate?
Here’s how the graduated tax works. For married couples filing jointly, Kansas charges the minimum rate of 3.1% for taxable income less than $30,000. For income between $30,000 and $60,000, taxpayers pay $930 plus 5.25% of all income over $30,000.
For taxable income over $60,000, married couples pay $2,505 plus a rate of 5.7% for any income over the $60,000 threshold.
The thresholds are less for single filers, but the percentages are the same. You can see the full breakdown on the state’s tax rates page.
But you won’t necessarily need to worry too much about the tax rates. Every time you hire an employee, you’ll need to furnish them with a Kansas Withholding Form K-4. This document will help you, the employer, know how much to withhold from each paycheck.
As for unemployment insurance taxes, the state will tell employers how much they owe in these taxes when they register with the Kansas Department of Labor.
All payments and quarterly tax returns are due at the end of the month after a quarter ends. The first quarter, for instance, ends on March 31. That means quarterly tax returns and payments are due April 30.
Kansas Paycheck Laws
All Kansas employers must pay employees at least once a month on regular paydays. Employees must be notified of these paydays in advance.
While you’re not required by law to put anything on an employee pay stub, employees can request an itemized statement of deductions for each pay period. So you might as well use your payroll software service’s pay stub feature and stay ahead of the game.
If an employee resigns, is terminated, or separates from the company in any other way, the final paycheck must be delivered on the next scheduled payday. Kansas doesn’t have any PTO payout laws. But if your employment policy says that you’ll pay out accrued PTO, you must do exactly that.
New Hire Reporting for Kansas Payroll
All newly hired or re-hired employees must be reported to the Kansas Department of Labor within 20 days of their hire. You can file electronically through your DOL account, or you can file the report by mail.
On it, you must include:
- Your federal Employer Identification Number (EIN)
- Your name and address
- The employee’s full, legal name
- The employee’s address
- The employee’s Social Security Number
- Employee’s hire or re-hire date
You can see the full details on the Kansas New Hire Reporting page.