Sales Taxes Removed From Bills

Midwest Energy customers may have noticed a pleasant surprise on July bills. Beginning July 1, Midwest Energy stopped collecting state, county and local sales taxes on delivery charges when delivery is separately itemized on bills.

The action follows the Kansas legislature passing House Bill 2136 in 2022, which Midwest Energy supported. Because language in the legislation was unclear, the Kansas Department of Revenue issued a ruling that the new law excludes natural gas and electricity delivery charges from the taxable basis of the sale, when those charges are separately stated on invoices.

The changes will result in significant savings. Midwest Energy customers paid an average of $695,000 annually in sales taxes related to delivery charges, including $414,000 in state sales tax, $167,000 in county tax and $114,000 in city sales tax. 

Under Kansas law, residential electric and natural gas customers do not pay state sales taxes on utility bills, although some county and city jurisdictions levy local sales taxes. The new law removes only the separately itemized delivery charge from taxation; other portions of the bill remain taxable.

“This is a big win for our customers,” said Todd Gabel, Accounting Manager at Midwest Energy. “Anything that saves our customers money and helps control rates, we support.”