Moving from Canada to Kansas: Two Brackets, No City Tax, and the Kansas City Suburbs

Kansas draws Canadians to two places: Johnson County, the Kansas side of the Kansas City metro where much of the region's corporate and tech employment sits, and Wichita, the aviation manufacturing capital where Spirit AeroSystems, Textron Aviation, and Bombardier's Learjet legacy recruit aerospace engineers. The tax picture is a two-bracket state income tax topping out at 5.58%, no city earnings tax (unlike Kansas City, Missouri, across the state line), and high combined sales tax.

Key takeaways

• Kansas's income tax has two brackets after the 2024 reform, topping out at 5.58%.
• No city income tax anywhere in Kansas; Kansas City, Missouri's 1% earnings tax applies only to Missouri-side residents and workers.
• Combined sales tax runs about 9% to 10% in Johnson County and Wichita.
• Property tax is near 1.4% effective.
• No estate tax. Social Security is fully exempt from Kansas tax.

The Canadian departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the day you leave. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 to defer tax on illiquid assets. The rate is your province's: on a $300,000 unrealized gain, roughly $72,000 from Alberta and $80,000 from Ontario, Quebec, or BC. Provincial health coverage ends around your departure date; confirm the exact date with your plan and arrange US coverage to start the same month.

US federal side

Dual-status return in the arrival year, FBAR on Canadian accounts above $10,000 aggregate, Form 8938 above thresholds, and the RRSP treaty deferral federally. The TFSA loses its tax-free status the day you become a US person; close it before crossing. Equity compensation vesting after the move is split by working days between Canada and the US.

Kansas's side

Two-bracket income tax topping out at 5.58%; no city income tax; 6.5% state sales tax plus local, about 9.1% in Overland Park and 9.5% in Wichita; property tax near 1.4% effective; no estate tax. Kansas starts from federal AGI, fully exempts Social Security, and exempts public pension income. A Johnson County resident who works in Kansas City, Missouri, pays Missouri non-resident tax and Kansas City's 1% earnings tax and claims a Kansas credit.

The RRSP

Federally deferred under Article XVIII of the treaty and deferred for Kansas because the state starts from federal AGI. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Kansas's graduated rates. CPP and OAS, treated like Social Security under the treaty, are exempt from Kansas tax.

Who makes this move

Canadian aerospace engineers to Spirit AeroSystems, Textron Aviation, and Wichita's aviation cluster, Canadian corporate and tech staff to Johnson County's employers (Garmin, Black & Veatch, the KC-area health systems), and Canadian agribusiness professionals to Kansas's food and grain companies.

Worked example

A Montreal aerospace engineer moves to Wichita on June 30 with $200,000 of unrealized gain in a non-registered account, $400,000 in an RRSP, and a Laval home sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 53.3%: roughly $53,000 across the T1 and TP-1.
• Home. Sold as a resident under the principal residence exemption on both returns.
• RRSP. No tax on departure; federal and Kansas deferral.
• Wichita. Combined top rate about 42.6%. Sales tax 14.975% becomes 9.5%. Property tax on a $400,000 home around $5,600.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"For tax year 2024, and all tax years thereafter: If the taxable income is: Not over $23,000 — the tax is: 5.2% of Kansas taxable income; Over $23,000 — $1,196 plus 5.58% of excess over $23,000." — Kansas Department of Revenue, Notice 24-08: Changes to Individual Income Tax, https://www.ksrevenue.gov/taxnotices/notice24-08.pdf

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

The Kansas City metro straddles a state line, and the tax difference is the Missouri side's 1% earnings tax. A Johnson County, Kansas, resident working in Kansas City, Missouri, pays it; a Kansas resident working in Overland Park does not. We run the address and the office together.

See also: Weighing Florida instead? See the Canada-to-Florida guide. Browse every corridor by city, province, and state.

Next step

Fairlight prepares the Canadian departure return, the first-year federal and state returns, and ongoing cross-border filings. See cross-border pricing or book a call.