Kansas City Earnings Tax: Who Pays the 1% E-Tax

Missouri side only

Why does the earnings tax only apply to the Missouri side?

The Kansas City metropolitan area straddles the Missouri-Kansas border. Kansas City, Missouri (KCMO) and Kansas City, Kansas (KCK) are separate municipalities in separate states. The 1% earnings tax was enacted by KCMO city ordinance and applies only within KCMO's jurisdictional boundaries. KCK has no equivalent city earnings tax.

This creates an important distinction for workers in the metro area. If you live in KCK or an Overland Park suburb on the Kansas side and commute to an office in KCMO, you owe the 1% on those Missouri-side wages. If you live in KCMO but work entirely in Kansas, you still owe the 1% as a resident (the resident tax applies to all income regardless of where earned). If you live and work entirely on the Kansas side, you owe nothing to KCMO.

How does the voter-renewal requirement work?

The Kansas City earnings tax is one of the few local taxes in the US that must be periodically reauthorized by voters. Under the city charter, the tax comes up for renewal every five years. If voters reject it, the tax would sunset. In practice, the e-tax has been renewed every time it has appeared on the ballot, most recently with strong voter support. The tax generates a substantial portion of the city's general fund revenue, funding police, fire and infrastructure services.

The renewal requirement means the tax's continued existence is never guaranteed. Opponents periodically campaign to let it expire, arguing it discourages businesses from locating within KCMO city limits. Supporters counter that eliminating the tax would gut the city budget. For workers and employers, the practical takeaway is that the 1% rate remains in effect and is expected to be renewed at the next scheduled vote.

Can remote workers claim a refund?

If you are a nonresident whose employer withheld the KCMO earnings tax on days you worked from your home outside city limits, you can request a refund from the Kansas City Revenue Division. This became a significant issue during and after the pandemic as permanent remote-work arrangements proliferated.

To file for a refund:

1. Determine how many days you physically worked within KCMO vs. remotely from outside the city.
2. Gather supporting documentation: remote-work agreement, employer letter, building access logs or a daily work-location log.
3. File a Non-Resident Refund Request with the KC Revenue Division, allocating wages between in-city and out-of-city days.
4. The refund will cover the 1% withheld on wages attributable to days worked outside KCMO.

KCMO residents cannot claim this refund because residents owe the tax on all income regardless of where they work.

How does the e-tax interact with Missouri state income tax?

Missouri charges a state income tax with graduated brackets. The KCMO earnings tax is a separate local tax on top of the state tax. You owe both if you live or work in KCMO. Missouri does not give a credit against state tax for the city earnings tax paid — they are treated as independent obligations.

The 1% earnings tax is deductible on your federal return as a state and local income tax, subject to the $10,000 SALT cap for most filers.

What about Kansas residents who commute to KCMO?

Thousands of workers live on the Kansas side (Overland Park, Olathe, Lenexa, Shawnee) and commute to offices in KCMO. These workers owe the 1% KCMO earnings tax on their city-source wages. Kansas does not have a reciprocal agreement with Missouri that would exempt them from the city tax.

Kansas does give residents a credit for income taxes paid to other states on their Kansas return, which can offset the Missouri state tax portion. But the KCMO earnings tax is a city tax, not a state tax, and the Kansas credit mechanism may not fully offset it. The practical result is that Kansas commuters pay the 1% as an additional cost of working in KCMO, on top of Kansas state income tax.

If you start working remotely from the Kansas side, you can file for a refund of the KCMO tax on remote days since you are not physically present in the city.

What if your employer does not withhold the earnings tax?

All employers with KCMO locations must register with the Kansas City Revenue Division and withhold the 1% from employee paychecks. If your employer is outside KCMO and does not withhold, you are responsible for filing and paying directly. KCMO residents must make quarterly estimated payments if their annual liability exceeds a threshold amount. Self-employed individuals within city limits file the earnings tax return directly with the Revenue Division based on net business income.

Worked example: $75,000 salary, single filer, KCMO resident

Illustrative example. Use our Kansas City take-home calculator for a personalized estimate.