Kansas Governor Laura Kelly, a Democrat, and Attorney General Derek Schmidt, a Republican who is running for governor, are agreed that it’s time to eliminate the state sales tax on food. At 6.5%, Kansas has the second-highest sales tax on food in the U.S., but Kelly and Schmidt both support an exemption for food. Whether that would apply to county sales taxes is another matter.
Five states have no sales tax at all – Alaska, Delaware, Montana, New Hampshire and Oregon – but many states and the District of Columbia exempt most purchases of food for household consumption.
Thirteen states impose some sales tax on food. The rates range from 0.125% in Arkansas to 7.0% in Mississippi. Federal law exempts grocery purchases made using SNAP (food stamp) benefits from sales taxes.
Kansas once had a refundable food sales tax credit that partly offset the cost. Since 2012, it has existed as a nonrefundable credit.
To qualify for the $125 tax credit, you must be 55 years of age or older, or be permanently blind or disabled, regardless of age; or have a dependent child under the age of 18 living with you for the entire year; and have a federal adjusted gross income of $30,615 or less.
The Institute on Taxation and Economic Policy and Kansas Action for Children agree that eliminating the sales tax on food would help low- and middle-income families. As an alternative, reinstating the refundable tax credit would also help those families, as well as low-income seniors. According to Emily Fetsch, director of fiscal policy at the KAC, “Many seniors rely on Social Security income and retirement distributions and often are below an income tax return filing requirement threshold. Before the change in the food sales tax refund, these seniors would file returns to receive the benefits of the food sales tax refund, helping them make ends meet.”
However, after Gov. Kelly announced her proposal for the total elimination of the sale tax on groceries, KAC President John Wilson voiced his support.
“This is a bold proposal, but one that we can afford as long as policymakers make responsible fiscal decisions in other areas,” Wilson stated. “With the anticipated incoming revenue, lawmakers must prioritize equitable and fiscally responsible policy this session, including addressing the food sales tax, allocating funding to the rainy day fund, and eliminating unnecessary transfers to the State General Fund.”
Kansas is enjoying a rare time of a budget surplus. Gov. Kelly has also proposed giving every Kansan who filed taxes in 2021 a $250 tax rebate this year. Sadly, because the food sales tax credit is nonrefundable, there are people who didn’t bother to file last year who will miss out on that.
Whether we eliminate the food sales tax or expand the rebate to a larger targeted group, this is a good move for the state, especially because counties and cities also have sale taxes and they disproportionally affect those who have the lowest incomes.