Kansas Tax Reform 2025: What Changed for Wichita Businesses
Kansas consolidated income tax brackets effective tax year 2024 (filed in 2025). For Wichita business owners on pass-through entities (S-corp, LLC, partnership), this means recalculating the S-corp election—if you elected S-corp status in 2023 to avoid self-employment tax on Kansas income, that savings may have evaporated under the new brackets. Re-model your election for tax year 2025 before March 1, 2025.
The franchise tax is gone. Corporations that used to file a franchise tax return annually (regardless of profit) no longer need to. That eliminates a $50–$200 annual filing that many Wichita businesses continued paying even when they didn't owe corporate tax. Update your accounting software and confirm the franchise tax line item is no longer scheduled.
| Tax Item | 2024 & Earlier | 2025+ |
|---|---|---|
| Individual income tax brackets | Multiple brackets 3.7%–5.7% | Consolidated, top rate TBD 2025 filing |
| Franchise tax | $50–$1,000+ annually | Eliminated (no longer due) |
| S-corp salary minimization | Worthwhile for some | Re-evaluate with CPA for 2025 |
| LLC taxed as S-corp | Effective strategy in 2024 | Still viable, needs re-modeling |
Wichita Sales Tax and Sedgwick County Nexus
Kansas has a 6.5% statewide sales tax. Sedgwick County (where Wichita is located) does not add county sales tax, but individual cities (Wichita proper, Goddard, etc.) add local components. Wichita's combined rate is 8.6%, among Kansas's highest. If you're selling into Wichita, you must collect and remit sales tax.
Remote sellers have nexus (a filing requirement) if they have any physical presence in Kansas, if they have a Kansas customer above $100,000 in annual sales (effective 2019), or if they're using a Kansas fulfillment center. Use-tax rules apply to purchases you make out-of-state—those are subject to Kansas use tax if you're a Wichita business. Your accountant should audit your purchase receipts annually and file use-tax returns if needed.
S-Corp Salary Strategy for Wichita Businesses 2025
An S-corporation elects to be taxed at the entity level on business profit, then distributes salary and dividends to owners. Salary is subject to self-employment tax; dividends are not. The strategy works when salary is minimized (you take the minimum "reasonable salary" and take the rest as dividends). Kansas tax reform changed the mathematics—model your 2025 election with a CPA before you decide.
For a $150,000 profit Wichita LLC, the difference between a straight-LLC election (pay 15.3% self-employment tax on all profit) vs. an S-corp election (pay 15.3% on a $60K reasonable salary, 0% on the $90K dividend) is roughly $1,300–$1,800 in annual self-employment tax savings. But you have to file an additional return (Form 2553), track payroll, and pay higher accounting fees. Start with your accountant's model—don't guess.
Payroll and Withholding for Wichita Business Owners
If you have employees, you must withhold federal income tax, Social Security, Medicare, and Kansas state income tax. Payroll is due on a schedule (weekly, biweekly, or monthly depending on employer size), and late payroll deposits result in significant IRS penalties and interest. Use a payroll processor (ADP, Gusto, Rippling, etc.) that automates deposits and tax filings—it costs $50–$300/month but eliminates penalties from late or miscalculated payroll.
Don't pay yourself only a dividend and skip W-2 payroll if you have employees. The IRS has specific rules about reasonable salary for S-corp owners, and penalties for non-compliance include back taxes, penalties, and interest. A Wichita CPA should review your payroll structure annually.
Taxes Getting Complicated?
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Schedule a ConsultationFrequently Asked Questions
Should I elect S-corp status for my Wichita business?
For most Wichita businesses with $100,000+ profit, an S-corp saves $1,000–$3,000 annually in self-employment tax. But the math changed in 2025 with Kansas tax reform. Model the 2025 election with a CPA before deciding.
What's the sales tax rate in Wichita?
Kansas is 6.5% statewide. Wichita adds local components for a combined rate of 8.6%. If you're selling in Wichita, you must collect and remit sales tax. Remote sellers with Wichita customers over $100,000/year also have a filing requirement.
Do I still owe Kansas franchise tax?
No. Kansas eliminated the franchise tax effective January 1, 2025. If you've been paying it, confirm it's removed from your tax return before the 2025 filing deadline.
How much does a Wichita business accountant charge?
Tax return preparation for a small business (S-corp, LLC, partnership) runs $1,500–$3,500 depending on complexity. Ongoing bookkeeping and payroll runs $200–$600/month. Budget $3,000–$8,000 annually for full accounting support.
When should I model my S-corp election for 2025?
Before March 1, 2025. The S-corp election (Form 2553) has a March 15 deadline for effective same-year treatment. Consult your CPA by early February to finalize the decision.