Are Social Security Benefits Taxable in Kansas?

Kansas provides specific tax treatment for Social Security benefits that differs from federal tax rules. State regulations determine whether residents must pay Kansas income tax on the benefits they receive. Understanding these rules is important for accurate state tax filing. The taxability of these benefits in Kansas is determined by state law, which has recently changed.

The Kansas Social Security Tax Exemption

Recent legislative changes have altered how Kansas treats Social Security income. Effective from tax year 2024, all Social Security benefits are exempt from Kansas income tax, regardless of the taxpayer’s income level. This is a shift from prior years, where the exemption was tied to a taxpayer’s federal adjusted gross income (AGI) of $75,000 or less.

Under the new law, any Social Security benefits included in a taxpayer’s federal AGI can be subtracted on the Kansas return. This change simplifies tax planning for retirees and ensures this income is not subject to state tax.

This full exemption applies to all filing statuses, including single, married filing jointly, and head of household. The exemption must be claimed as a subtraction modification when filing a state income tax return.

Determining Your Kansas Adjusted Gross Income

To file a Kansas tax return, a taxpayer must first calculate their Kansas Adjusted Gross Income (AGI). This calculation begins with the Federal AGI, which is found on a federal income tax return like Form 1040. Federal AGI includes most sources of taxable income.

Common types of income included in Federal AGI are wages, distributions from retirement accounts like traditional IRAs and 401(k)s, and pension income. Other sources that contribute to this figure are interest, dividends, and capital gains from the sale of assets.

While Social Security benefits may be included in Federal AGI, Kansas law allows for their full subtraction. Another Kansas-specific adjustment is for retirement benefits from the Kansas Public Employees Retirement System (KPERS) that were included in Federal AGI. These subtractions are applied to the Federal AGI to arrive at the final Kansas AGI.

Claiming the Exemption on Your Tax Return

To claim the exemption for Social Security benefits, taxpayers must report it as a subtraction modification on their Kansas income tax return, Form K-40. The subtraction is detailed on Schedule S, the Kansas Supplemental Schedule, which is filed with the main K-40 form.

On Schedule S, taxpayers will find a section for subtraction modifications with a specific line for reporting Social Security benefits that are exempt from Kansas tax. The taxpayer enters the full amount of federally taxed Social Security benefits on this line.

The total from the subtraction modification section of Schedule S is then transferred to the corresponding line on Form K-40. This reduces the taxpayer’s Kansas AGI, lowering their state taxable income and Kansas tax liability. It is important to use the correct forms for the relevant tax year and ensure the amount entered matches the taxable Social Security benefits on the federal return.