To make things easy let me ask the following:Person is a resident of KansasPerson earns 50,000 of mineral rights income from KentuckyKentucky Taxes 4% of income (~$2000)Kansas gives credit for $2000 tax paidKansas Income Tax Rate is ~5.7%Kansas wants another $850 for it's cut (($50,000 * .057) - $2000)I understand if this is employment or other earned income, but these are mineral rights for property entirely contained in and for minerals extracted in the state of Kentucky. Is Kansas really owed the difference in income tax?

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alvinskeev

Question

Out of State Mineral Rights Royalty Tax

Forum|Forum|1 year ago
January 26, 2025
1 reply
0 views

To make things easy let me ask the following:

Person is a resident of Kansas
Person earns 50,000 of mineral rights income from Kentucky
Kentucky Taxes 4% of income (~$2000)
Kansas gives credit for $2000 tax paid
Kansas Income Tax Rate is ~5.7%
Kansas wants another $850 for it's cut (($50,000 * .057) - $2000)

I understand if this is employment or other earned income, but these are mineral rights for property entirely contained in and for minerals extracted in the state of Kentucky.

Is Kansas really owed the difference in income tax?

Not A Product Question

SabrinaD2

As a Kansas resident, you're taxed on all your income, no matter where it's earned. So, even though your $50,000 in mineral rights income comes from Kentucky, Kansas still taxes it. To avoid double taxation, Kansas offers a credit for taxes you've paid to other states. In your example, you've paid $2,000 to Kentucky (4% of $50,000). Kansas' tax on that same income would be $2,850 (5.7% of $50,000). After applying the $2,000 credit for the Kentucky tax, you'd owe Kansas the remaining $850. So yes, it looks like Kansas is owed the difference in income taxes. For additional information see Kansas Department of Revenue page 3 & page 7.