How does Kansas tax retirement income?

If you have considered retiring in the farm belt, Kansas is among the best states for retirement. The sunflower state is known for its natural beauty, rolling hills, and barbecues. It is also emerging as a popular retirement destination due to its low cost of living and quality of life. But, is Kansas a tax-friendly state for retirees?

Kansas exempts social security benefits from state income taxes if your adjusted gross income (AGI) is below $75,000. If your AGI exceeds $75,000, you will pay full state income taxes on your social security benefits. Retirement plan distributions from 401(k), IRA, and other retirement plans are also subject to state income taxes. However, public pensions from the federal and state government are fully exempt from Kansas state income taxes.

Is social security taxable in Kansas?

Kansas exempts social security benefits from state income taxes for retirees with an AGI of $75,000 or less. If your federal AGI exceeds $75,000, you will pay state income taxes on social security benefits, alongside federal income taxes at your tax bracket. However, public pensions from the federal, state or local government are fully exempt from state income taxes.

Are retirement plan distributions taxable in Kansas?

When you retire in Kansas, you will pay state income taxes on your retirement plan distributions from 401(k), 403(b), IRA, or other retirement plans. The state income taxes range from 3.1% to 5.7%, and the amount of tax you pay depends on your filing status and income levels.

Are railroad retirement benefits taxable in Kansas?

If you receive railroad retirement benefits, you won’t pay state income taxes. Kansas exempts retirement plans administered by the US Railroad Retirement Board, including railroad retirement benefits, dual vested benefits, and supplemental annuities. You will still pay federal income taxes on the railroad retirement benefits.

How much are income taxes in Kansas?

The state of Kansas has a graduated income tax for single, married filing separately, married filing jointly, and head of household. The state income taxes range from 3.10% to 5.70%.

The 3.1% income tax rate applies to taxable income from $0 to $15,000 for single filers, married filing separately, and head of household, as well as taxable incomes from $0 to $30,000 for joint filers.

The 5.25% income tax rate applies to taxable incomes from $15,000 to $30,000 for single filers, married filing separately, and head of household, as well as taxable incomes from $30,000 to $60,000 for joint filers.

The 5.7% income tax rate applies to taxable incomes above $30,000 for single filers, married filing separately, and head of household, as well as taxable incomes above $60,000 for joint filers.

How much are property taxes in Kansas?

If you live and own property in Kansas, you will pay property taxes to both the local and state government. The average effective property tax rate is $1.41%, and the median property tax rate is $1,411 for every $100,000 of property value. However, since property values are relatively low than in other states, property taxes are considered low.

To know how much property taxes you will pay in your county, you should contact your county assessor and state. You can also find information on current property taxes on the official website of the State of Kansas.

Kansas residents who own a home in the state may be eligible for the Kansas homestead refund. In 2022, homeowners who are 55 or older and earned $36,600 or less in 2021 may be eligible to collect a refund of up to $700. If you are 65 years or older, you may be eligible for the SAFESR program, which offers refunds of up to 75% of the property taxes paid. To qualify for the SAFESR program, your household income should be $20,900 or less in 2021, and the property’s value should not exceed $350,000.

If you are eligible for both types of property tax refunds, you cannot claim both refunds. You can only claim either the homestead refund or the SAFESR refund. You can complete the refund claims for both to determine which tax relief program gives you the highest refund, then file only one claim.

Kansas Sales Tax Rates

The state of Kansas has a statewide sales tax of 6.5% on retail sales. Apart from the statewide sales tax, cities and counties in Kansas collect approximately 1% and 2% in sales tax respectively. On average, you can expect to pay a combined sales tax of 8.7%, making it one of the highest sales tax rates in the United States.

The state collects sales taxes on most goods and services such as groceries, clothing, and motor vehicles. However, Kansas exempts prescription drugs from sales taxes. There is a proposed reduction of the state sales tax on groceries to 4% in 2023, 2% in 2024, and 0% in 2025 and subsequent years. County and city sales taxes on groceries will still apply.