Kansas cut sales tax on food, but here’s why rates can sometimes change block to block
At the bustling intersection of 135th Street and Metcalf in Overland Park, shoppers who want to save on food only need to cross the street.
Go to Sprouts Farmers Market on the southern side of 135th, and you’ll pay 8.1% sales tax on food. But the Hen House on the north side of the street, the tax is just 6.6%.
Since Kansas’ sales tax rate on food dropped from 6.5% to 4% on Jan. 1, some shoppers have been surprised to see the rates they are paying don’t match the savings they expected. While some stores did struggle in the first few days to adjust their rates, the lingering confusion is now rooted in how sales tax rates can sometimes fluctuate block by block in ways many residents are unlikely unaware of.
An array of special tax districts can add to your bill depending on where you’re shopping. When you go to the grocery store, you’re charged state, county and city sales taxes, which add up to produce the total sales tax rate. However, at stores that fall within a special tax district, which include community improvement districts, you’ll pay even more.
The Sprouts Farmers Market on 135th Street is in Overland Park’s Corbin Park Community Improvement District, a retail shopping area just to the west of the Museum at Prairiefire. The Hen House isn’t in a special district, so food is taxed at standard Kansas, Johnson County and Overland Park rates – adding up to 6.6%.
“I had no idea. I mean … I thought all of Overland Park was one tax rate. To have something broken out in different areas of Overland Park, it just seems ridiculous,” said Eli Pfefer, a retired Overland Park resident.
When Pfefer bought $17.17 worth of cosmic crisp apples and roma tomatoes from Sprouts on Friday, he paid $1.39 in tax – a total rate of 8.09%. Pfefer, believing the rate in Overland Park was 6.6% across the entire city, reached out to The Star and provided his receipt.
As it turns out, the total tax rate on food within the Corbin Park Community Improvement District, where an additional 1.5% tax is added, is 8.1%, according to rates published this month by the Kansas Department of Revenue.
At Corbin Park and other CIDs, additional sales tax is assessed, with the revenue aiding developers with project costs, including infrastructure, design, engineering and other construction-related expenses. Corbin Park is essentially an outdoor mall that includes a JCPenney, Von Maur and other stores. According to its website, the area remains under development.
Pfefer was taxed the right amount, even though he originally thought something was off.
“I watch the news, I research things online,” Pfefer said. “I prefer facts myself and I wasn’t aware of this stuff.”
Many tax rates
Kansas has more than 1,000 distinct sales tax areas – the sum of every county, city, and special tax district in the state. Overland Park alone has 25 such areas, spanning everything from the Prairiefire development to the corporate headquarters of Jack Stack Barbecue.
Johnson County’s online map tool shows how these special tax districts are sprinkled throughout the county – and just how high sales tax rates can go, even setting aside food. Shop at some areas around the AMC Dine-In 28 near I-35 and 119th Street and you’ll pay nearly 10.5% in sales tax on non-food items.
The overall sales tax rate you should be paying on food on the Kansas side of the Kansas City metro area are listed below, using information from the Kansas Department of Revenue. The figures don’t include special tax districts.
6.475% in Prairie Village
6.6% in Leawood
6.6% in Overland Park
6.625% in Kansas City
6.75% in the Wyandotte and Leavenworth counties portions of Bonner Springs
6.85% in Lenexa
6.975% in Merriam
6.9755 in Olathe
6.975% in Roeland Park
6.975% in Westwood
7.1% in Shawnee
7.225% in the Johnson County portion of Bonner Springs
7.225% in Mission
7.475% in Fairway
Tax rate information for every county, city and special tax district in the state, along with the location of the districts, are published by the Kansas Department of Revenue here.
Sources of Confusion
State Rep. Mari-Lynn Poskin, a Leawood Democrat, said she’s heard from several constituents confused about the taxes being applied to food.
“I think it was surprising to learn that you might pay more at one store than at another store within Johnson County,” she said. “I’m hoping that will also shed light on the fact that we didn’t repeal the state food sales tax 100% to begin with.”
Poskin said requiring retailers to break down the source of tax on receipts could be useful for transparency but would also be burdensome. Instead, she said the state’s focus should be on lowering the rate to begin with.
Jon McCormick, president and CEO of the Retail Grocers Association, said confusion among consumers over tax rates involves several factors.
First is the term “groceries,” which shouldn’t be confused with food, he said. Kansas’ rate cut applies only to food – fruits, vegetables, cuts of meat and the like. It doesn’t include non-food items that people often buy at grocery stores, like toilet paper and pet food.
The reduction also doesn’t apply to prepared food, which is food sold hot or sold with eating utensils. If your grocery store has a cafe or cafeteria where you’re buying meals to eat-in or go, you’re probably paying full sales tax on those items. The prepared food exception also means meals at restaurants are still taxed at the full rate.
“If you take a hot carryout out of the deli and they give you utensils and a napkin, it’s taxed at a higher rate,” McCormick said.
Additionally, the numerous tax rates add to confusion, McCormick said, because the reduction applies only to the statewide rate. “So that’s the next confusing thing,” he said.
Local taxes still apply
Kansas Gov. Laura Kelly, a Democrat, has been pushing the Republican-controlled Legislature to immediately eliminate the statewide sales tax on food. Under the current law, approved last spring, the statewide sales tax on food is being phased out gradually.
The Jan. 1 first rate reduction was the first. The tax will drop to 2% in January 2024 and will be fully gone by 2025.
But whether lawmakers approve eliminating the statewide rate this spring or it is phased out over time, the law doesn’t affect local sales taxes on food – meaning food will not be truly tax free. For example, Pfefer and other shoppers will still pay a 4.1% rate on food at the Sprouts on 135th Street in Overland Park after the statewide sales tax on food is fully eliminated.
Local governments may face pressure to lower or eliminate their own taxes on food, but McCormick said he isn’t aware of any city or county that has so far followed the state’s lead.
Much of Johnson County’s own sales tax rate is dedicated to specific purposes, including public safety and stormwater.
Johnson County Commission Chair Mike Kelly said that, according to his understanding, if commissioners wanted to carve food out of the county sales tax, it would have to go to a countywide vote.
Kelly said he understands that CIDs and other tax districts, often a parade of of acronyms, can appear esoteric. While cities often the lead the charge on these districts, he acknowledged the county does play a small role.
But the districts are sometimes necessary to attract significant development, he said.
“It’s a balance, like anything else,” Kelly said.
Even if local rates remain, taking the statewide rate to zero remains important because of how much prices have risen because of inflation, McCormick said, pointing to the cost of eggs, milk and bread.
“Kansas families need it,” McCormick said. “Groceries have gone up a lot more than a lot of other things.”
The Star’s Katie Bernard contributed reporting
