Tax Alert

ALERT: Kansas payroll tax changes require employer action

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June 30, 2017

On June 6, 2017, the Kansas Senate and House passed legislation creating new tax brackets, raising the tax rates and repealing the non-wage business income exemption. This legislation included an increase in the individual state income tax rates to a new top rate of 5.20% from a current top rate of 4.6% for 2017 and increasing to 5.7% for 2018. The 2017 increase is retroactive to January 1.

Accordingly, the Kansas Department of Revenue has issued new withholding tables for Kansas wage-earners. The new withholding tables are effective July 1, 2017. Both employers and individual Kansas taxpayers will be affected in different ways by this payroll tax change.

  • Employers must update payroll software to reflect these tax rate changes. Additionally, employers may want to communicate with employees about the tax rate change so employees understand why their pay amount is different.
  • Kansas employees will see a reduced take-home wage because of the increased payroll tax rate. Those who are high earners may want to consult with their tax professional to evaluate options related to the new payroll tax rate, including the possibility of deferring payment of the additional taxes until their filing deadline next year.

The Department of Revenue’s increased withholding tables will be based on the tax rates which become effective on January 1, 2018. These tables increase withholding to account for the retroactive portion of the tax bill's rate increases for the current tax year.

The Department made the decision that it was best to address both the retroactivity of the new 2017 tax rates and the fact that the rates will change again on January 1, 2018.

Reminder: there are no penalties or interest charges for under-payments of income tax if the total tax bill is paid by April 17, 2018.

Employers may need to contact their payroll vendor to implement these new rates. The rates can be found at the Kansas Department of Revenue web site.

Contact us

For more information about these Kansas tax changes, please contact Sonia Phillips, AGH’s senior payroll manager, or Jerry Capps, AGH’s senior vice president of state and local tax, using their information below.

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Sonia Phillips
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Sonia Phillips

Payroll Senior Manager
Outsourcing Services

Sonia and her team handle payroll processing, reporting and tax filings for multi-state and multi-site companies. An AGH employee since 1991, Sonia has expertise in both technology and employee benefits consulting as well as payroll. She has helped develop a variety of operational, management and executive information systems projects within and outside the employee benefits industry. Before joining the outsourcing services group, Sonia managed the technology infrastructure and plan processing systems for AGH’s employee benefits services division. She worked with internal and external clients to accurately assess their information system needs and managed the projects designed to satisfy these needs, as well as any necessary integration.

Gerald Capps, JD

Senior Vice President
State and Local Tax

Jerry Capps and his State and Local Tax (SALT) team provide sophisticated state and local tax planning, strategic advice and advocacy to numerous mid-market, Fortune 100 and industry-leading companies. The team has returned many millions of dollars in one-time and recurring tax savings to companies.

In addition to planning and compliance, the SALT practice includes legislation and policy, litigation, and controversy matters involving income, franchise, sales and use and property taxes. His work involves critical questions on nexus, apportionment, the Multistate Tax Compact, and the equal protection, due process, and commerce clauses of the United States Constitution. Capps is also a respected advocate on issues of tax policy. He represents clients in all phases of state and local tax controversy, including audit assistance and administrative hearings, and he provides counsel on state and local income and transactional costs for mergers, acquisitions and corporate reorganizations. He has been engaged as a keynote speaker for organizations including the Institute for Professionals in Taxation, state and local CPA societies, university and professional accounting conferences, and chambers of commerce.

Capps is a member of the Institute for Professionals in Taxation, the Kansas Society of Certified Public Accountants, the American Bar Association, and the Kansas Bar Association.

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NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.