Kansas Tax Strategy: Sunflower State Tax Freedom
Kansas has moderate income tax rates (3.1-5.7%), but combined with federal rates, retirement income faces significant taxation. Section 7702 provides complete freedom.
The Kansas Tax Picture
Kansas taxes are moderate, but federal taxes remain the bigger challenge for high earners planning retirement.
✅ The Good News
- Moderate state rates (3.1-5.7%)
- Social Security fully exempt
- Low cost of living
- Business-friendly environment
⚠️ The Challenge
- Federal taxes still apply (up to 37%)
- 401(k) distributions federally taxed
- Combined rate can exceed 42%
- No retirement income exclusion
Kansas Tax By The Numbers
Section 7702: Your Tax Freedom Solution
Section 7702 of the IRS tax code creates a powerful opportunity: access your retirement funds through policy loans that are completely tax-free—at both federal and state levels. For Kansas residents, this means escaping both the state tax burden and federal taxation entirely.
Federal Tax-Free
Policy loans bypass federal income tax entirely. No 22-37% federal tax on your retirement income.
State Tax-Free
No Kansas state income tax on policy loans. Your retirement income stays tax-free at the state level.
Kansas Professionals We Typically Serve
Aviation Professionals
Executives and engineers at Spirit, Textron, and other aerospace companies
Healthcare Professionals
Physicians at University of Kansas Health and other systems
Johnson County Executives
Corporate leaders in the Kansas City suburban corridor
Agricultural Leaders
Large-scale farmers and agribusiness executives
University Professionals
High-earning faculty at Kansas and Kansas State
Manufacturing Leaders
Executives in Kansas manufacturing sector
Kansas Areas We Serve
Matt Nye's Recommendation
"Kansas is steady—moderate taxes, low cost of living, and a strong aerospace and agricultural economy. It is not flashy, but it is solid."
"For my Wichita aviation clients and Johnson County executives, the tax picture is straightforward: 5.7% state plus up to 37% federal equals over 40% of your 401(k) going to taxes."
"Section 7702 changes that equation. Tax-free income at both state and federal levels. Whether you are building airplanes or building a business, that is how you keep more of what you have earned."
— Matt Nye, 20-Year Industry Veteran
Frequently Asked Questions
Kansas taxes are moderate. Why do I need Section 7702?
Kansas 5.7% is reasonable, but federal taxes take 22-37%—five to seven times the state rate. Section 7702 eliminates both, but the federal savings are the big win.
I work in Wichita aviation. How does Section 7702 help?
Aviation professionals have excellent incomes but high federal tax brackets. Section 7702 converts taxable income into tax-free retirement income. The savings over 20 years are substantial.
I live in Johnson County but work in Missouri. How does this work?
Multi-state taxation is complex for KC metro residents. Section 7702 policy loans are not subject to Kansas, Missouri, or federal income tax. Clean, simple, tax-free.
Social Security is exempt in Kansas. Is that enough?
Social Security exemption is helpful, but for high earners, 401(k) and IRA distributions often far exceed Social Security. Those distributions are fully taxed. Section 7702 provides additional tax-free income.
Kansas tried tax cuts before. What happened?
Kansas experimented with aggressive tax cuts that created budget issues. Section 7702 does not depend on state policy—it is federal tax code that provides tax-free income regardless of what Kansas does.
Ready for Kansas Tax Freedom?
Discover how Section 7702 can eliminate both state and federal taxes on your retirement income. Schedule your free analysis today.
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