What Is the KC Earnings Tax and Who Pays It?
Understand the 1% Kansas City earnings tax. This guide clarifies how residency and work location determine your tax liability and filing requirements.
The Kansas City Earnings Tax is a 1% levy on earned income and business profits connected to Kansas City, Missouri. This local tax helps fund essential services such as road maintenance, trash collection, and public safety departments. The tax applies differently to residents versus non-residents who work within the city, and it is a separate obligation from federal and state income taxes.
Who is Subject to the KC Earnings Tax
Residents
Individuals who reside within the official city limits of Kansas City, Missouri, are subject to the 1% earnings tax on their total earned income. This applies regardless of where the work is physically performed, meaning a resident who commutes to a job in a different city or state still owes the tax on their full salary, wages, and commissions.
Non-Residents
For non-residents, the earnings tax liability is more narrowly defined. These individuals are only required to pay the 1% tax on the portion of their income that is earned for work performed within the physical boundaries of Kansas City, Missouri. If a non-resident works partly inside the city and partly outside, their income must be allocated to determine the taxable amount.
Exempt Income
Certain types of income are exempt from the Kansas City earnings tax, as the levy applies only to earned income. Unearned income sources not subject to the tax include:
- Social Security payments
- Pensions
- Distributions from retirement accounts
- Interest and dividends
- Capital gains
Employer Withholding and Reporting Requirements
Businesses located in Kansas City, Missouri, or those that employ individuals working within the city’s limits, have a direct responsibility to withhold and remit the earnings tax. This obligation requires employers to deduct the 1% tax from the gross compensation of their employees for work performed in the city.
Employers remit these withheld taxes to the Kansas City Revenue Division on a schedule that aligns with their state withholding frequency, such as monthly or quarter-monthly. They must also file an annual reconciliation of the total earnings tax collected. Businesses are also subject to a tax on their own net profits, which is reported separately.
By January 31st each year, employers must furnish a Form W-2 to each employee. This document must clearly state the total wages paid, the amount of wages subject to the Kansas City tax, and the exact amount of the 1% earnings tax that was withheld throughout the year.
Filing an Individual Tax Return
Preparation and Forms
Individuals who owe the tax or are due a refund must file a return with the city’s Revenue Division. The primary form for residents and most filers is Form RD-109. For non-residents who are specifically seeking a refund of taxes withheld for days they worked outside of Kansas City, Form RD-109NR is required.
To complete these forms, you will need your Form W-2, which shows your KC-specific wages and withholding. Non-residents claiming a refund for remote work days need detailed documentation to substantiate their claim. This often includes a signed letter from their employer verifying the number of days worked outside the city or a detailed log of work locations.
To calculate a refund, a non-resident would determine their total workdays in the year, subtract the days worked within KC, and divide the result by the total workdays to find the percentage of time worked outside the city. This percentage is then applied to their total earnings to find the non-taxable portion.
Submission and Deadlines
As of 2025, all Kansas City earnings tax returns must be filed electronically. The city requires filers to use its online portal, “Quick Tax,” for all submissions and payments. Filing by other methods, such as mail, is no longer permitted and may result in penalties.
The annual deadline for filing the earnings tax return and paying any tax owed aligns with the federal income tax deadline, which is April 15th. If this date falls on a weekend or holiday, the deadline shifts to the next business day. After filing, individuals who owe additional tax can make payments through the online portal. Those expecting a refund should anticipate a processing time that can range from several weeks to a few months, depending on the complexity of the return and the volume of filings.