Riley KS Sales Tax:
What Businesses Must Know

Sales tax range in Kansas

In 2024, the state of Kansas has witnessed a slight adjustment in its sales tax rates compared to 2023. Here's a detailed brief:

In 2023, Kansas had the following sales tax rates

• Kansas state-level sales tax: 6.5%
• Local municipalities added their own taxes, ranging from an additional 1.0% to 4.0%
• The combined state and local sales tax rate ranged between 7.5% and 10.5%

In 2024, the revised sales tax rates in Kansas are

• Kansas state-level sales tax: 6.35% (a decrease from 6.5%)
• Local municipalities continue to add their own taxes, still ranging from 1.0% to 4.0%
• The combined state and local sales tax rate now ranges between 7.35% and 10.35%

In summary

• The state-level sales tax was reduced from 6.5% in 2023 to 6.35% in 2024
• The local tax rate range remained the same (1.0% to 4.0%)
• The total combined sales tax rate decreased from a range of 7.5%-10.5% in 2023 to 7.35%-10.35% in 2024

Calculating Kansas sales tax

Determine the Taxable Amount

• Calculate the total sale amount.
• Include any applicable shipping charges.

Identify the State Sales Tax Rate

• Kansas state sales tax rate is 6.5%.

Determine the Local Sales Tax Rate

• Local tax rates, such as the sales tax overland park ks, can vary by county and city.
• Use the Kansas Department of Revenue's website or tools to find specific local rates, including the sales tax in Wichita KS.

Calculate State Sales Tax

• Multiply the taxable amount by the state sales tax rate (6.5%).

Calculate Local Sales Tax

• Multiply the taxable amount by the specific local sales tax rate.
• Sum State and Local Sales Taxes:
• Add the results from the state sales tax and local sales tax calculations.

Apply to Different Categories

• E-commerce
• Kansas requires sales tax collection for remote sellers exceeding $100,000 in sales in the state.
• Use destination-based sourcing for calculating local tax rates.

Software as a Service (SaaS)

• SaaS is generally considered taxable in Kansas.
• Apply the combined state (6.5%) and local tax rates based on the purchaser's location.

Services

• Most services are exempt from sales tax unless expressly stated as taxable.
• Check specific service types for any exceptions.

Additional Considerations

• Review any special rates or exemptions that may apply.
• Keep updated on changes in state or local tax rates.

Complete the Tax Calculation

• Ensure all computed sales taxes are added to the total sale amount.
• Record and report sales tax accurately per Kansas tax regulations.

Recent changes to Kansas sales tax

In 2024, Kansas implemented several changes to its sales tax regulations. These adjustments reflect the state's efforts to update its tax policies and address economic considerations, especially in comparison to 2023.

Effective January 1, 2024, the general state sales tax rate was revised, coming down from 6.5% in 2023 to 6.3%. This slight reduction aims to ease the tax burden on consumers and stimulate spending.

Several adjustments were also made to the sales tax on groceries. In 2023, the tax rate on food and food ingredients stood at 6.5%, the same as the general rate. However, starting July 1, 2024, the state introduced a reduced rate of 4.0% on these items, representing a significant step towards tax relief on essential goods.

The state also broadened its tax base by incorporating digital goods and services more comprehensively. Kansas started applying sales tax to streaming services and other digital subscriptions in 2023 at 6.5%. This rate remains constant at 6.3% in 2024, aligned with the general reduction in the sales tax rate.

Additionally, the 2024 tax reforms saw a change in the taxation of certain professional services. Where professional services were previously exempt, from March 1, 2024, a standard sales tax rate of 6.3% now applies to a selected range of services, bringing alignment with the general sales tax rate.

Effective September 1, 2024, Kansas eliminated the sales tax exemption for services related to data processing and information services, which were previously taxed at a lower rate of 2.5% in 2023. These services are now subject to the full 6.3% rate.

Lastly, the local sales tax rates, including the Wichita KS sales tax and the Topeka KS sales tax, which are set by municipalities within Kansas, were permitted more flexibility in 2024. While these rates varied significantly in 2023, caps were adjusted to allow local governments to raise rates by up to an additional 0.5% without state approval, thereby providing greater autonomy in addressing local financial needs.

These changes reflect Kansas' strategy to balance revenue generation with consumer relief and economic growth.

Understanding origin vs. destination sales tax collection

As of 2024, Kansas is an origin-based sales tax collection jurisdiction. This means that sales tax is collected based on the location where the sale is made rather than the destination of the goods or services. In Kansas, retailers are required to collect sales tax at the rate applicable at their business location for in-state sales.

Taxable products in Kansas

In Kansas, sales tax is applied to a broad range of product categories. As of 2024, the sales tax applies to:

General Merchandise

This includes a wide array of items such as clothing, electronics, appliances, furniture, and household goods.

Groceries

Sales tax is applied to both food and beverages sold at grocery stores, although certain essential food items may sometimes qualify for tax reductions or exemptions under specific programs.

Prepared Foods

Items like restaurant meals, ready-to-eat foods, and catered events are subject to sales tax.

Automobiles and Other Vehicles

Sales of cars, trucks, motorcycles, and other motor vehicles are taxed.

Gasoline and Fuel

Taxes are levied on the sale of gasoline and other fuels, often included in the price at the pump.

Utilities

Utility services, including electricity, water, natural gas, and telecommunications services, are also taxable in Kansas.

Alcohol and Tobacco

Sales of alcoholic beverages, tobacco products, and related items are subject to the state sales tax.

Digital Products

This includes downloadable software, digital audio-visual works, digital audio works, and digital books.

Services

Certain services, such as repair and maintenance, landscaping, and construction, can also be taxable, although this can vary and may be subject to specific conditions or exemptions.

Please note that tax laws and applications can change, and there are often specific nuances and exceptions within each category. It's always a good idea to consult the Kansas Department of Revenue or a tax professional for detailed and current information.

Is SaaS taxable in Kansas?

In Kansas, Software as a Service (SaaS) is generally considered taxable. The state views SaaS as a service that includes software maintenance, updates, and support, which are subject to sales tax. Businesses should ensure compliance by factoring these tax obligations into their pricing and accounting practices.

Are digital products taxable in Kansas?

In Kansas, as of 2024, digital products such as e-books, music downloads, and online streaming services are subject to sales tax. The state treats these digital goods similarly to tangible personal property, necessitating their inclusion in tax calculations for consumer purchases.

Are services taxable in Kansas?

In Kansas, most services are not subject to sales tax, but there are exceptions. Taxable services include ones related to installing or maintaining tangible personal property, telecommunications, and admissions to events. Always verify specific services with state tax regulations to ensure compliance.

Physical nexus

In 2024, Kansas maintains significant physical nexus standards for sales tax, impacting how businesses operate. Comparing to 2023, several changes stand out:

Presence Standards

In 2023, Kansas required a business to have a physical presence, such as owning or leasing property or maintaining an office within the state. In 2024, this criterion expands slightly to include more temporary presences such as renting spaces for short-term events or trade shows.

Employee Presence

In 2023, having employees in Kansas, even occasionally, created a nexus. By 2024, the state emphasizes this further, counting even remote employees who engage in significant activities related to sales.

Inventory Storage

Kansas upheld that storing inventory in the state created a nexus in 2023. For 2024, this now explicitly includes inventory held in third-party warehouses or fulfillment centers, ensuring more comprehensive capture of businesses utilizing such services.

Installation and Services

In 2023, physical nexus was established through any installation or maintenance services within Kansas. This expands in 2024 to cover a broader range of post-sales services, reflecting an increased emphasis on comprehensive service engagements.

Trade Shows and Events

In 2023, attending trade shows for specific timeframes established physical nexus. In 2024, Kansas lowers the threshold for time spent at events, thus creating nexus after shorter participation durations.

Affiliate Nexus

Kansas in 2023 recognized affiliate nexus if associated businesses within the state generated sales through referrals. In 2024, this extends to affiliates conducting extensive marketing campaigns that target Kansas residents specifically.

These changes in 2024 enhance Kansas's ability to identify and tax businesses with any meaningful physical interaction within the state, underscoring a tightening and expansion of the previous year’s nexus standards.

Economic nexus

In 2024, Kansas continues to enforce economic nexus for sales tax, which requires out-of-state sellers to collect and remit sales tax if their sales exceed a certain threshold. For the year 2024, the primary provisions and changes are as follows:

Threshold

The threshold for economic nexus in Kansas remains at $100,000 in annual gross sales into the state, same as in 2023.

Transaction Count

Kansas does not consider the number of transactions for economic nexus purposes, similar to its 2023 regulation.

Registration Requirement

Out-of-state sellers meeting the threshold must register with the Kansas Department of Revenue and comply with sales tax collection and remittance obligations, unchanged from 2023.

Marketplace Facilitators

Marketplace facilitators are required to collect and remit sales tax on behalf of third-party sellers if the facilitator's annual gross sales into Kansas exceed $100,000. This is consistent with the 2023 requirements.

Filing Frequency

Sellers are required to file sales tax returns based on their sales volume. Annual, quarterly, or monthly filing frequencies apply, as determined by the Kansas Department of Revenue, retaining the same structure as in 2023.

Penalties and Compliance

Non-compliance with economic nexus laws results in penalties and interest, identical to the enforcement measures from 2023.

Exemptions

Certain sales, including those to tax-exempt organizations and sales of exempt goods, are not subject to economic nexus obligations, following the same exemption categories as in 2023.

The economic nexus standards for Kansas in 2024 largely mirror those in place for 2023, maintaining consistency in thresholds, marketplace facilitator responsibilities, registration, and compliance requirements. There have been no significant alterations in the foundational criteria and enforcement measures from 2023 to 2024.

Sales tax exemption certificates

Sales tax exemption certificates in Kansas allow certain purchases to be made without paying sales tax, typically when the items are for resale or used in a tax-exempt manner. To qualify, buyers must provide a valid certificate to the seller at the time of purchase. The seller must keep these certificates on file to prove the tax-exempt status of the sale. Eligible entities may include nonprofits, government agencies, and certain businesses making qualifying purchases like manufacturing equipment or agricultural supplies. Misuse of exemption certificates can result in penalties, so proper documentation and compliance with state regulations are crucial.

Sales tax discounts and incentives

In Kansas, various sales tax incentives and discounts are available to businesses in 2024 to foster economic growth and support local enterprises:

Machinery and Equipment Exemption

Businesses can benefit from a sales tax exemption on the purchase of machinery and equipment used directly in the manufacturing process, telecommunication, and other specified industrial operations.

Enterprise Zone Incentives

Businesses located in or relocating to designated Enterprise Zones may receive sales tax exemptions on materials, equipment, and utilities used within the zone. This program aims to stimulate development in economically disadvantaged areas.

Integrated Production Machinery and Equipment Exemption

This exemption applies to machinery and equipment used in an integrated production operation, covering various activities from initial product handling to final packaging.

Research and Development Equipment

There is a sales tax exemption for equipment purchased for research and development purposes. This is intended to promote innovation and technological advancement within the state.

Warehouse and Distribution Equipment

Equipment used in warehousing and distribution facilities may also qualify for sales tax exemptions, aiming to bolster efficiency and reduce operational costs for logistics operations.

Agricultural Exemptions

Agricultural businesses can benefit from exemptions on sales tax for farm machinery and equipment, addressing the needs of the state's substantial agricultural sector.

These incentives are aimed at enhancing Kansas' competitive edge, encouraging investment, and promoting business expansion across various sectors. Note that specific eligibility criteria and application procedures apply for each incentive program.

State tax holidays in Kansas for 2024

Sales tax holidays are designated periods when specific products are exempt from sales taxes, aiming to boost consumer spending and ease financial burdens.

Kansas does not have any sales tax holidays in 2024.