For years, retirees in Kansas faced a frustrating reality—unlike many other states, Kansas taxed Social Security benefits for those earning over $75,000 in adjusted gross income. That meant many middle- and high-income retirees were losing a portion of their hard-earned benefits to state taxes.
But in summer 2024, Governor Laura Kelly signed a new tax law that changed everything. Kansas officially repealed its state tax on Social Security income, joining many other states that no longer tax these benefits.
This change is a big win for retirees, with projections suggesting it could save Social Security recipients in Kansas $152 million in the first year alone. With this update, retirees can keep more of their income, providing greater financial security, flexibility, and better long-term planning.
However, while Kansas no longer taxes Social Security benefits, federal taxes apply, and other retirement income sources may still be subject to state tax. This guide will explain what you need to know about the new law, how Social Security is taxed at the federal level, and key tax planning strategies to maximize your retirement savings.
What Is Social Security and How Does It Work?
Social Security is a federal benefits program designed to provide financial support to retirees, disabled individuals, and surviving family members of deceased workers. It receives funding through payroll taxes (FICA), which workers contribute to throughout their careers.
Who Is Eligible for Social Security?
- Workers qualify after earning 40 work credits, typically 10 years of employment.
- The full retirement age (FRA) depends on birth year (typically 66 to 67 years old).
- You can start withdrawing benefits as early as age 62, but monthly payments will be permanently reduced.
- Holding off on collecting benefits until age 70 can increase monthly payouts by 8% per year.
Types of Social Security Benefits
- Retirement Benefits: Monthly payments for eligible retirees.
- Survivor Benefits: Support for widows, widowers, and dependents.
- Disability Benefits (SSDI): Assistance for individuals who cannot work due to disability.
- Supplemental Security Income (SSI): Needs-based benefits for low-income individuals.
Social Security is a big part of retirement planning, making it essential to understand how taxes impact your benefits at both the state and federal levels.
Kansas Repeals Social Security Tax: What You Need to Know
The New Law Explained
- Effective Date: The repeal is retroactive to January 1, 2024.
- Before the Change: Those with adjusted gross income of more than $75,000 paid taxes on Social Security benefits, regardless of filing status.
- Now: All Social Security benefits are exempt from Kansas state income tax, regardless of income.
This tax relief is part of a broader tax cut package, expected to provide about $2 billion in tax cuts for Kansans over a five-year period. The repeal means more financial flexibility for retirees, allowing them to allocate funds toward medical expenses, housing, travel, or investments.
What About Federal Taxes on Social Security?
While Kansas no longer taxes Social Security benefits, federal taxes still apply. You could pay taxes on up to 85% of your Social Security benefits, depending on your total income.
Federal Tax Brackets for Social Security Benefits
- Individuals with AGI over $25,000: Up to 50% of benefits are taxable.
- Individuals with AGI over $34,000: Up to 85% of benefits are taxable.
- Married couples with AGI over $32,000: Up to 50% of benefits are taxable.
- Married couples with AGI over $44,000: Up to 85% of benefits are taxable.
Planning Tip
To reduce federal taxes on Social Security benefits, retirees should consider lowering their taxable income through Roth IRA withdrawals, charitable donations, and careful tax planning.
Other Kansas Tax Changes Impacting Retirees
Beyond eliminating state taxes on Social Security, Senate Bill 1 introduced several other tax cuts that could benefit retirees:
Higher Standard Deduction (Tax Year 2024)
- Single filers: Increased from $3,500 to $3,605.
- Married filing jointly: Increased from $8,000 to $8,240.
- Head of household: Increased from $6,000 to $6,180.
Personal Exemption Allowance Increase
- For Married Filing Jointly: The personal exemption allowance is now $18,320.
- For Single, Head of Household, or Married Filing Separately: The personal exemption allowance is now $9,160.
- There is an additional exemption of $2,320 for each dependent claimed on the return.
New Kansas Income Tax Brackets
- $0 – $46,000 (married) or $0 – $23,000 (single): 5.2% tax rate.
- Income above these amounts: 5.58% tax rate.
Property Tax Relief
- Exemption on the first $75,000 of home value, saving homeowners over $236 million statewide over the next five years.
These changes provide additional relief, helping retirees keep more of their hard-earned money.
What Kansas Still Taxes: Retirement Income You Should Plan For
While Social Security benefits are now tax-free at the state level, Kansas still taxes other forms of retirement income, including:
IRA & 401(k) Distributions.
Out-of-State Pensions.
Private Retirement Plans.
Planning Tip
Retirees can consider Roth IRA conversions to reduce taxable withdrawals in retirement. Unlike traditional IRAs, Roth withdrawals are tax-free at both the state and federal levels.
Tax Planning Strategies for Kansas Retirees
- Delay Social Security Benefits: Waiting until age 70 qualifies you for higher monthly benefits and reduces reliance on taxable withdrawals.
- Take Advantage of Tax-Free Roth IRA Withdrawals: Roth distributions do not count toward taxable income, keeping your AGI lower.
- Utilize Kansas’ Higher Standard Deduction: If the new standard deduction exceeds your itemized deductions, taking the standard deduction may be more beneficial.
- Minimize Required Minimum Distributions (RMDs): Consider a Qualified Charitable Distribution (QCD) from your IRA to reduce taxable RMDs while donating to charity tax-free.
Kansas Tax Cuts Could Attract More Retirees and Economic Growth
The elimination of Social Security taxes positions Kansas as a more tax-friendly state for retirees, increasing its appeal to those seeking lower-cost living.
Additionally, Kansas lawmakers passed a STAR bonds package designed to attract major sports teams, such as the Kansas City Chiefs and Royals, to boost economic development. This could create more business opportunities, job growth, and revenue if successful.
What This Means for You
Kansas retirees no longer pay state taxes on Social Security benefits.
Other tax cuts, like higher deductions and property tax relief, could mean even more savings.
Strategic tax planning is essential—especially for IRA and 401(k) withdrawals.
While this tax change is excellent news, federal taxes and other taxable retirement income still require careful planning.
Want to maximize your retirement savings and keep more of your money? Consider working with a tax strategist to create a plan that protects your income and lowers your tax burden.
Tax Goddess has helped taxpayers like you claim more than $1.88 BILLION in tax savings through Strategic Tax Coaching (STC). Book a FREE Consultation with us today if you’d like to join the billion-dollar savings club and find out how much STC can help you save.
