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Kansas Creates Tax-Free Zones for New Residents

Today’s quote:  “Toto, I’ve a feeling we’re not in Kansas anymore.”  Dorothy, from “The Wizard of Oz” (1939).

Seeking to reverse this feeling, and to halt population declines in some areas, the Kansas legislature has passed and sent to the Governor a bill that seeks to lure non-residents to Kansas by providing a 5-year holiday from Kansas income taxes for those who move to mostly rural counties designated as “rural opportunity zones.” (ROZ’s)  SB 198 was approved by the Legislature March 18, 2011, and is expected to be signed by the Governor, who had proposed the idea.  http://www.kslegislature.org/li/b2011_12/year1/measures/documents/sb198_02_0000.pdf

Some 50 of the 105 Kansas counties are included, mostly in the largely rural western half of the state.  However, some are within commuting distance of more urban locales, such as Wichita.  The bill includes a list of the counties that are covered.  The 40 counties originally designated were those believed to have suffered a population decline of at least 10% over the last decade, but 10 others were added over the course of consideration of the bill.  The additional 10 counties either had relatively low median household incomes, population declines of 8% or more, or were located next to a number of other counties which would be included in the program.  According to recent census data, 77 Kansas counties lost residents from 2000-2010, with declines in 23 exceeding 10%. 

Under the bill, a new resident of one of these 50 counties must have been domiciled outside Kansas for five or more years immediately before moving to Kansas, and have had less than $10,000 of Kansas source income for each of those five years.  The new resident must also maintain a domicile in the ROZ for the entire year in which he or she seeks the income tax credit.  The individual must timely file returns, and be free of tax delinquency.

A new resident meeting these requirements will pay no Kansas income tax during 2012 through 2016.

Another portion of the bill allows each ROZ to establish programs under which the County will participate in a State matching program to assist with repayment of student loans for any new resident meeting the requirements above.  The benefit would be up to $15,000, half paid by the State and half by the County, spread over a five-year period.  It is expected that many of the ROZ’s will opt to participate.

The new program was sought by the medical and dental professions, among others, in the belief it would assist in attracting doctors and dentists to underserved areas of the state.  However, it is not limited to such professionals.  The program is available for any new resident of one of the ROZ’s who meets the requirements outlined above.

This is a program that might be of some use in relocation.  Although most of the designated counties are not in areas to which an employee would be relocated, as noted some are within commuting distance of larger population centers.  If a company has employees in various locations in Kansas (such as, for example, government agencies with many local offices, or companies with retail stores or other business locations in numerous areas), it would pay to look into this new program, which would provide a significant benefit to an employee willing to relocate to the state. 

In the meantime, Kansas is hoping that lots of nonresidents share Dorothy’s wish that “I want to go home.” 

Comments

Mortgage Loan

Willim Gskoen at 8/20/2013 2:56 PM

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