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Kansas Tax And Business Climate



Monika Miles Kansas Tax Climate

This month brings us to the center of the country, the Great Plains state of Kansas. Kansas is a Midwestern state that epitomizes the U.S. Heartland with its Great Plains setting of rolling wheat fields. The Museum of World Treasures in Wichita, the state’s largest city, covers world history from dinosaurs to Elvis, while the open-air Old Cowtown Museum highlights the city’s pioneer past. In nearby Hutchinson, the Cosmosphere displays the Russian Vostok and Apollo 13 spacecrafts.

For thousands of years, what is now Kansas was home to numerous and diverse Native American tribes. Tribes in the eastern part of the state generally lived in villages along the river valleys. Tribes in the western part of the state were semi-nomadic and hunted large herds of bison.

The western two thirds of the state, lying in the great central plain of the United States, has a generally flat or undulating surface, while the eastern third has many hills and forests. The land gradually rises from east to west. It is a common misconception that Kansas is the flattest state in the nation. In fact, Kansas has a maximum topographic relief of 3,360 ft, making it the 23rd flattest U.S. state.

Kansas’s climate can be characterized in terms of three types: humid continental, semi-arid steppe, and humid subtropical. The eastern two thirds of the state (especially the northeastern portion) has a humid continental climate, with cool to cold winters and hot, often humid summers. Most precipitation falls during both the summer and the spring.

Business Climate

By 2015, Kansas was one of the most productive agricultural states, producing high yields of wheat, corn, sorghum, and soybeans.

Nearly 90% of Kansas’ land is devoted to agriculture. The state’s agricultural outputs are cattle, sheep, wheat, sorghum, soybeans, cotton, hogs, corn, and salt. By far, the most agricultural crop in the state is wheat. Eastern Kansas is part of the grain belt, an area of the major grain production in the central United States.

The state’s industrial outputs are transportation equipment, commercial and private aircraft, food processing, publishing, chemical products, machinery, apparel, petroleum, and mining. Kansas is ranked eighth in the nation for petroleum production. It is also ranked eighth in natural gas production.

The state’s economy is also heavily influenced by the aerospace industry. Several large aircraft corporations have manufacturing facilities in Wichita and Kansas City, including Spirit Aerosystems, Bombardier Aerospace (LearJet), and Textron Aviation (a merger of the former Cessna, Hawker, and Beechcraft brands). Boeing ended a decades-long history of manufacturing in Kansas in 2013.

Major companies headquartered in Kansas include the Spirit Corporation (with world headquarters in Overland Park), YRC Worldwide (Overland Park), Garmin (Olathe), Payless Shoes (national headquarters and major distribution facilities in Topeka), and Koch Industries (with national headquarters in Wichita), and Coleman (headquarters in Wichita). Telephone Company Embarq formerly had its national headquarters in Overland Park before its acquisition by CenturyTel in 2009, and still employs several hundred people in Gardner.

Kansas is also home to three major military installations. Fort Leavenworth (Army), Fort Riley (Army), and McConnell Air Force Base (Air Force). The Kansas National Guard has units at Forbes Field in Topeka and operates the Great Plains Joint Training center (formerly the Smokey Hill Bomb Range) which is one of the largest and busiest bombing ranges in the country, During World War II, Kansas was home to numerous Army Air Corps training fields for training new pilots and aircrew. Many of those airfields live on today as municipal airports.

Tax Climate  

Kansas’ top individual income tax rate is 5.7%, which ranks 25th in the nation. The top corporate income tax is 7%, which ranks 29rd in the nation. The state sales tax rate is 6.5%, which ranks 9th in the nation. Various cities and counties in Kansas have an additional local sales tax. Kansas is one a few states that taxes groceries.

Other taxes that are of interest to consumers are the gasoline tax and cigarette tax. The state levies a gasoline tax of 24.03 cents per gallon and a state cigarette tax of $1.29 is applied per 20-pack.

Kansas is moderate in its approach to taxation of technology products for sales tax purposes. All digital products are exempt. Prewritten computer software that is electronically downloaded is taxable, while custom computer software that is electronically downloaded is exempt from taxation. Lastly, all cloud services are exempt from taxation. How products are produced, sold and delivered is critical to determining the tax status.

Tax Incentives and Credits

Kansas offers many business tax incentives, corporate tax credits and economic development programs for companies. Here are a few of those incentives:

Business and Job Development Credit- The purpose of the business and job development credit is to provide tax incentives throughout the state which encourage businesses to create new jobs through capital investment projects involving the building of new facilities or the expansion or renovation of existing facilities. For more information on this credit, click here.

Research and Development Credit- The Kansas research and development credit allows a taxpayer who makes expenditures in research and development activities in Kansas to claim an income tax credit. For more information regarding this credit, click here.

Random Facts

  • The geographic center of the 48 contiguous states in in Smith County, near Lebanon.
  • The first woman mayor in the U.S. was Susan Madora Salter. She was elected to office in Argonia in 1887.
  • Dwight D. Eisenhower from Abilene was the 34th president of the U.S.
  • Amelia Earhart, first woman granted a pilot’s license by the National Aeronautics Association and first woman to fly solo across the Atlantic Ocean, was from Atchison.
  • Barton County is the only county in Kansas that is named for a woman, the famous volunteer civil war nurse Clara Barton.
  • The world famous fast food chain of Pizza Hut restaurants opened its first store in Wichita on June 15, 1958.

Have a tax question? Contact Monika Miles.

 

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.