For corporations whose business income is solely within state boundaries, the tax is 4 percent of net income. In addition, net income in excess of $50,000 is subject to a 3 percent surtax. For those corporations with business income both inside and outside the state, the net income attributed to the Kansas operation is based upon the percentage of the corporation’s business located in Kansas. A business’s tax obligation is determined by a three-factor formula using the proportion of sales, property and payroll in Kansas compared to total sales, property and payroll. State law allows net operating losses to be carried forward to each of the 10 years following the taxable year of the net operating loss. Three-Factor Formula Sales in KS Property in KS Payroll in KS Total Sales Total Property Total Payroll Total apportionable income is multiplied by the average percentage to determine Kansas net income. Kansas corporate income tax is calculated using the apportioned net income multiplied by the corporate income tax rate mentioned above. Corporations may opt to use a two-factor (sales and property) apportionment formula to calculate tax liability if the payroll factor for a taxable year exceeds 200 percent of the average of the property and sales factors. Three-Factor Formula Sales in KS Property in KS Total Sales Total Property Total apportionable income is multiplied by the average percentage to determine Kansas net income. Kansas corporate income tax is calculated using the apportioned net income multiplied by the corporate income tax rate mentioned above. Three-Factor Formula Investment funds services companies headquartered in Kansas and employing at least 100 individuals on a full-time equivalent basis are taxed only on their income earned from the administration of funds of Kansas residents. An investment funds service corporation is defined as any corporation or S corporation headquartered and doing business in Kansas that derives more than 50 percent of its gross income from the provision of management, distribution or administration services to or on behalf of an investment company, or from trustees, sponsors and participants of employee benefit plans that have accounts in an investment company. These companies may compute their tax liability using a single-factor formula, which multiplies their qualifying income from funds management services by the percentage of their funds’ shares owned by Kansas residents. A separate calculation must be performed on each fund administered by a company. To continue to use this computation method, companies must maintain at least 95 percent of the Kansas jobs that they had when they first used the computation method. All income that is not from the management, distribution or administration of services is apportioned using the three-factor formula of property, payroll and sales.