Kansas operated a franchise tax system until 2011 that applied to businesses with a Kansas-attributable net worth of $1 million or more. Unlike income taxes that focus on profits, this tax examines capital stock, surplus, and retained earnings allocated to Kansas.
Under K.S.A. 79-5401(g), the Kansas franchise tax act does not apply to any tax year beginning after December 31, 2010, and the Department of Revenue confirms the corporate franchise tax was repealed effective tax year 2011.
Today, no Kansas entity owes or files anything related to franchise tax, as it has been completely eliminated from the state's business tax structure.
Kansas businesses face several key tax obligations since the franchise tax disappeared. Corporate income tax has undergone significant changes, with Kansas scheduled to move to single-sales-factor apportionment and market-based sourcing for tax years beginning on or after January 1, 2027, under 2025 House Bill 2231.
Until then, Kansas generally uses a three-factor apportionment formula (property, payroll, and sales) with an elective two-factor method for certain taxpayers.
Sales and use tax applies to goods and certain services, requiring careful tracking of taxable transactions and exemptions. Payroll taxes add another layer, covering both state withholding and unemployment insurance contributions. Property taxes take a bite, too, based on commercial real estate and personal property values.
In addition, your main state deadline is now the Secretary of State's Information Report, filed every two years.
For-profit entities must file by April 15 of their assigned odd or even year, and not-for-profit entities must file by June 15 of their assigned year. The assigned year is based on your formation year (even-year formations file in even years; odd-year formations file in odd years).
File it online, pay the fee, and you maintain good standing. Miss it, and late fees stack up quickly, followed by potential administrative dissolution.
Is Kansas franchise tax still in effect?
No. Under K.S.A. 79-5401(g), the Kansas franchise tax act does not apply to tax years beginning after December 31, 2010, and the Department of Revenue confirms the corporate franchise tax was repealed effective tax year 2011. You don't owe anything or need to file anything related to it.
What replaced the Kansas franchise tax?
No new franchise-style tax was enacted; Kansas relies on its existing income, sales/use, and property tax systems. You still need to stay on top of those obligations, but there's no successor franchise tax.
Do I still need to file anything with Kansas if I do business there?
Yes. If you are registered with the Kansas Secretary of State as a domestic or foreign corporation, LLC, LP, or similar entity, you must file a biennial business entity information report to maintain good standing and avoid forfeiture of your articles or authority to do business. The report is purely informational with a modest filing fee.
How does Kansas now tax businesses operating in the state?
Kansas imposes a corporate income tax that's shifting to single-sales-factor apportionment and market-based sourcing for tax years beginning on or after January 1, 2027, under 2025 House Bill 2231. This means your Kansas tax liability will depend primarily on sales made to Kansas customers rather than property or payroll in the state.
Kansas eliminated its franchise tax effective tax year 2011. However, businesses still face ongoing compliance requirements, such as biennial Secretary of State information reports, the upcoming transition to single sales factor apportionment in 2027, and coordinating Kansas obligations with those of multiple states.
Discern’s comprehensive compliance management system covers annual business filings for all 51 U.S. jurisdictions. We also provide deadline tracking and automatic notifications for Kansas biennial reports and tax obligations, ensuring you never miss critical deadlines.
Book a demo to see how Discern can simplify your multi-state compliance.
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