Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Kansas to phase out sales tax on groceries
byMay 17, 2022
On May 11, 2022, Kansas Governor Laura Kelly signed House Bill 2106, solidifying the effort to phase out sales tax on grocery items in the coming years. As inflation continues to create challenges for households across the country, removing the sales tax on necessities like grocery items is a welcome reprieve for consumers.
A phased approach
Over the next few years, the sales tax rate on grocery items in Kansas will decrease each year. In 2023, the rate will decrease from 6.5% to 4%, before falling to 2% in 2024 and 0% in 2025.
Currently, Kansans pay more for groceries than consumers in almost every other state, due to a relatively high sales tax rate of 6.5%. Considering a number of states fully exempt grocery items from sales tax, this has been a popular item of discussion in the Kansas legislature and a top priority for Gov. Laura Kelly.
Kansas will join the growing list of states that exempt grocery items from sales tax. See a state-by-state guide to grocery taxability here.
The impact on consumers
Removing the food sales tax is mainly for the benefit of struggling families. But how much does removing the sales tax actually benefit low-income households?
A study done by the Tax Foundation provides some insights on this topic. Because low-income consumers often use government support for grocery items, like Supplemental Nutrition Assistance Program (SNAP), or Women, Infants and Children (WIC) programs, they often won’t see huge impacts of removing the grocery sales tax. This is because groceries purchased using these types of government benefits aren’t taxable, so a grocery sales tax doesn’t make much of an impact on this group of consumers.
The bottom-third income bracket in the US saves $2.50 per person on average annually in states that have no sales tax on grocery items, according to the study. Experts have proposed alternative solutions like lowering the overall state sales tax rate, making purchases across the board more affordable.
How food retailers should prepare
We say this often at TaxJar – sales tax is always changing. Laws are constantly being amended, or in this case, repealed altogether. This is one of the reasons that sales tax compliance is challenging for retailers. Keeping up with rates and product taxability is one thing, but having to also keep up with changing laws? That’s a full-time job.
You can avoid the hard work of being a sales tax expert by using a sales tax solution like TaxJar. TaxJar has sales tax experts working to keep up with changing laws so you can relax knowing your compliance is well taken care of. When states make changes, we make changes to our system, ensuring you are only collecting sales tax when necessary.
Ready to automate your compliance? Start a free trial today.