Kansas payroll tax changes

ALERT: Kansas payroll tax changes require employer action

June 30, 2017

Kansas individual income tax rates require employers to change payroll tax rates; employees’ take-home to decrease.

What you need to know

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.

Shawn Sullivan

Senior Vice President
Tax Services

Shawn serves as one of two primary leaders in the firm’s large tax group. He has extensive public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, wholesale/retail distribution, real estate development and management, construction, and contractor industries. In addition to enhancing business performance to minimize tax consequences, he has experience in mergers and acquisitions and international tax and business structuring.

A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.

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.

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.

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