A Sales Tax Primer


Did you know?

The base sales-tax rate in Kansas is 5.3 percent.

Marion County currently adds a 1 percent tax to that base.

Two communities in Marion County add a local sales tax: Hillsboro, 1 percent; Marion, 0.75 percent. Hillsboro uses half for streets and other capital improvements; the other half will pay for the aquatic center. Marion uses its sale tax for economic development, including the creation of an industrial park,

In order to collect sales tax on such things as catalog and Internet purchases, a “destination-based” rule took effect in Kansas on July 1, 2003. It states the rate of sales tax due will be the rate in effect where the customer takes delivery/possession of the purchased item. Certain items, including motor vehicles, are excepted out of the rule; the sale tax for those exceptions is “origin based” (sourced to the retailer’s business location).

Every 1 percent of sales tax adds $250 to the purchase of a $25,000 car.

Hillsboro auto dealerships generate between $13 million and $16 million in taxable sales each year, according to sources in the field.

Farm equipment is exempt from sales tax.

The highest sales-tax rate for a Kansas county is 2 percent. Four counties among 105 currently charge that rate: Cheyenne, Republic, Sedgwick and Wichita.

Neodesha has the highest combined sales tax rate of any community in Kansas at 8.3%. Only three other communities charge 8% or more: De Soto (8.15 in Johnson Co., 8.05 in Leavenworth Co.), Wamego (8.05) and Yates Center (8.05).

Sales tax survey

Following are the sales-tax rates for a sampling of communities in this market area.

Abilene 7.05

El Dorado 6.30

*Hesston 6.30

Hillsboro 7.30

Hutchinson 7.05

McPherson 6.80

Marion 7.05

*Newton 6.30

Peabody 6.30

Salina 7.05

Wichita 7.30

* Harvey County voters will vote April 4 on additional 1 percent county sales tax..

Sales tax and car purchases

In a nutshell: Regardless where you buy a car in Kansas, your total sales-tax bill will never be less than what you would pay if you bought it where you live.

Scenario A: Buyer Bob, the out-of-county prospect.

When Buyer Bob, who lives in *Harvey County, buys a $25,000 car from a dealership in Hillsboro, he will pay $1,825 in sales tax, based on Hillsboro’s current combined rate (7.3%).

If Buyer Bob purchases the car for the same price in Newton (the combined rate for all of Harvey County is 6.3%), he would pay $1,575 in sales tax.

Bottom line: Purchasing the car in Hillsboro would cost Buyer Bob $250 more out of pocket than if he bought it for the same price in Newton.

* * *

When Buyer Bob purchases that car in Augusta, he will pay $1,450 in sales tax at the dealership, based on Augusta’s combined rate (5.8%). Then, when he registers the vehicle in his county of residence (Harvey), he will pay the county treasurer an additional $125 in sales tax-the difference between the Augusta rate and the Harvey County rate.

Bottom line: No out-of-pocket gain or loss to Buyer Bob for buying in Augusta.

* Chosen for the sake of simplicity. All communities in Harvey County have the same sales-tax rate (currently 6.3%).

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