Add Formulas and Calculations Legal Kansas Subcontractors Forms For Free

During the 2024 Special Legislative Session, Senate Bill 1 was passed and signed into law. The Bill changed the individual income tax rates, increased the standard deduction for individuals, and increased the amount of the allowable personal exemption for individuals filing Kansas income tax returns.

The law makes various changes to the tax imposed on a pass-through entity (PTE) that elects to be taxed as a entity-level PTET (electing PTEs). The PTET rate, which was a static statutory 5.7%, now corresponds to the highest rate imposed on resident individuals under K.S.A. 79-32,110(a), which currently is also 5.7%.

In Kansas, partnerships are required to file an annual tax return, specifically Form K-120, with the Kansas Department of Revenue. This return provides information about the partnership's income, deductions, and tax liability, which is then used to calculate the amount of taxes owed to the state.

274 limits the federal deduction for most business meal expenses to 50% of those expenses for tax years after 2017. There is an exception for business meals provided by restaurants in 2021 and 2022. Taxpayers can deduct 100% of those expenses.

Form K-120ES is used for PTE estimates. These can be generated either if the election is made with a large enough value on Form K-120S, line 30, or if estimates are forced.

However, if the taxpayer derives more than 50 percent of its gross business receipts from one or more “qualified business activities,” the applicable formula is a three-factor formula consisting of the sum of the property factor, the payroll factor, and the sales factor, divided by three.

Changes include: Income tax rate of 2.25% net income reduced to 1.94% for state and national banking associations. Income tax rate of 2.25% net income reduced to 1.93% for trust companies and savings and loan associations. Surtax remains at 2.125% of net income exceeding $25,000.

The four states that continue to use three-factor apportionment are Alaska, Hawaii, Kansas, and Oklahoma. As an example of the different methods of application, consider a company that makes 25 percent of its sales in-state, owns 30 percent of its property in-state, and pays 50 percent of its payroll in-state.

Many states have moved away from the three-factor formula and have adopted formulas that use a single sales factor. As of now, Kansas is one of only five states that continue to use the three- factor formula for apportionment.