Kansas Withholding Tax On Life Insurance: What You Need To Know

Kansas withholding tax is the money that is required to be withheld from wages and other taxable payments to help prepay the Kansas income tax of the recipient. The employer or payer holds the tax in trust for the state, and then remits these funds to the Kansas Department of Revenue on a regular basis. The employer or payer pays no part of this tax.

The KW-100 Kansas Withholding Tax Guide provides more information, including how withholding is calculated.

Withholding tax rates for wages paid on and after July 1, 2024

Kansas has a state income tax on personal income. Kansas withholding tax is the money that is required to be withheld from wages and other taxable payments to help prepay the Kansas income tax of the recipient. The Kansas Department of Revenue (KDOR) administers income taxes.

Kansas has a progressive income tax system, meaning employees’ tax contributions increase as they earn more. The income tax rates for tax year 2024 are changing mid-year, so it is recommended that employees review their Kansas withholding to ensure the amount withheld from wages approximates the employee’s expected income tax liability.

Kansas has two methods to determine the amount of tax to be withheld from employees’ wages. Both methods involve tables for single and married taxpayers, depending on how often they get paid (weekly, monthly, etc.). The wage bracket tables method is the easiest of the two methods. The percentage formula method involves a mathematical formula based on Kansas’s personal income tax rates. You’ll need to use it if you have highly paid employees or use a computerized payroll system. The percentage rate tables are based on the employee’s net wage (or take-home pay). To calculate the net amount, first calculate your employee’s withholding allowance amount and deduct it from the gross wage for the pay period, then use the percentage rate tables provided by the KDOR.

Who must withhold Kansas income tax?

Kansas has a state income tax on personal income. Kansas withholding tax is the money that is required to be withheld from wages and other taxable payments to help pre-pay the Kansas income tax of the recipient.

As a general rule, every Kansas employer or payer who is required to withhold federal income tax according to the Internal Revenue Code must also withhold Kansas income tax. This includes employers in other states who have employees working in Kansas.

Employers in other states are required to withhold Kansas income tax when the employee is a Kansas resident or when wages are paid for services performed in Kansas. If the employee is a Kansas resident working outside of Kansas, the employer must withhold from the employee's total wages the amount of withholding tax due in Kansas, less the amount of withholding tax required by the other state(s).

A payer is any person or organisation, other than an employer, who makes a payment other than wages, or a payment of a pension, annuity or deferred income that is taxable under the Kansas income tax act. Payers include trustees of pension funds and gambling establishments.

Kansas income tax withholding is required on payments other than wages when federal withholding is required. Any determination by the IRS that relieves a payer from withholding on these payments also applies for Kansas income tax withholding purposes.

Kansas withholding may also apply to pensions, annuities or deferred income paid to a Kansas resident. To be subject to withholding, the payment must be taxable under the Kansas income tax act and be:

• Periodic payments of pensions, annuities and other deferred income
• Non-periodic distributions of pensions, annuities and other deferred income
• Eligible rollover distributions of pensions, annuities and other deferred income

Kansas withholding on deferred compensation plans follows federal withholding rules. Contributions to a deferred compensation plan are generally not subject to withholding. However, if federal withholding is required on a taxable distribution from a deferred compensation plan, Kansas withholding is also required.

Who are employees/payees?

For Kansas withholding tax purposes, an employee is either:

• A resident of Kansas performing services either inside or outside of Kansas
• A nonresident of Kansas performing services within the state of Kansas

Employers in other states are required to withhold Kansas income tax when the employee is a Kansas resident or when wages are paid for services performed in Kansas. Although an individual may be allowed considerable discretion and freedom of action, that person is considered an employee as long as the employer has the legal right to control what will be done, how it will be done, and the result of the services performed.

A payee is any person or organization who receives a payment other than wages, or payment of a pension, annuity, or deferred income which is subject to Kansas withholding. Examples include:

• Kansas residents receiving a taxable non-wage payment, or a taxable pension, annuity, or other deferred income
• Nonresident individuals or organizations receiving a management/consulting fee

Sole proprietors and partners are not considered to be employees of their business, and therefore will not withhold income tax on their compensation. Instead, they will make quarterly estimated income tax payments to prepay their state income tax liability on taxable income.

How to compute Kansas withholding?

Kansas has a state income tax on personal income. Kansas withholding tax is the money that is required to be withheld from wages and other taxable payments to help prepay the Kansas income tax of the recipient. There are two methods to determine the amount of Kansas income tax to be withheld from a wage or other payment subject to Kansas income tax withholding: the percentage formula and the wage bracket tables. Both methods use a series of tables for single and married taxpayers for each type of payroll period frequency (weekly, monthly, etc.).

The percentage formula is a mathematical formula based on the Kansas personal income tax rates. This method uses the tables that are provided by the Kansas Department of Revenue. The percentage rate tables are based on the net wage or payment amount. To compute the net amount of the payment, you must first calculate the employee’s/payee’s withholding allowance amount and deduct it from the gross wage or payment for the period before using the percentage rate tables.

An individual’s withholding allowance amount is their total Kansas individual income tax personal exemption amount divided by the number of payroll periods in the calendar year. The personal exemption amount is $9,160 for those who are single, head of household, or married filing separate. For individuals who are married filing joint, the personal exemption amount is $18,320 (equivalent to two exemptions of $9,160). Individuals filing as Head of Household may claim an additional withholding allowance in the amount of $2,320. There is also an additional $2,320 personal exemption per dependent.

The wage bracket tables are calculated using the percentage formula, with the results rounded and placed in convenient brackets. Withholding is computed by plotting the gross wage and the number of withholding allowances on the table that corresponds with your payroll frequency and the individual’s marital status.

When the payment for the period exceeds the last bracket of a wage bracket table, you must use the percentage formula to calculate the amount of tax to withhold on the entire payment.

Kansas withholding computed using the percentage method may be rounded. Round to the nearest whole dollar by dropping amounts under 50 cents and increasing amounts from 50 to 99 cents to the next higher dollar. For example, $2.49 becomes $2 and $2.50 becomes $3.

Specific withholding situations

Kansas withholding tax is the money that is required to be withheld from wages and other taxable payments to help prepay the Kansas income tax of the recipient. The employer remits the withholding to the state and will issue the employee a W-2 statement indicating the amount of state income tax withheld for that employee.

A Kansas resident is any individual who has established a permanent residence in Kansas for any period of time during the year, or spent a total of more than 6 months in Kansas during the year. If your employee is a Kansas resident performing services entirely in Kansas, Kansas withholding tax is due on the total earnings.

When you employ or pay a Kansas resident for services performed outside Kansas (either full time or part-time), withhold from that employee’s total wages the amount of withholding tax due to Kansas, less the amount of withholding tax required by the other state(s).

If a nonresident works full time in Kansas, the employer must withhold Kansas income tax from the employee’s total wages as if the employee were a Kansas resident.

The computation of Kansas withholding tax for a nonresident employee who performs services for an employer both inside and outside of Kansas is a two-step process. First, the employer computes the Kansas withholding tax amount on the total wages paid during the period. Second, the resulting amount of Kansas withholding is then multiplied by a nonresident percentage factor. The nonresident percentage is obtained by dividing the employee’s services performed in Kansas by the total services performed.

If a nonresident employee performs all services outside of Kansas, the wages paid to that employee are not subject to Kansas withholding.

Any employer or payor who must withhold Federal Income Tax from payments other than wages made to Kansas residents must also withhold Kansas Tax.

Frequently asked questions