Kansas operated a franchise tax system until 2011 that applied to businesses with 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.
Kansas lawmakers abolished the franchise tax for all periods beginning after December 31, 2010, as they determined that its administrative burden outweighed the revenue benefits. 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 adopting a single sales factor apportionment and market-based sourcing approach. This shifts the tax focus to sales within the state, unlike the previous formula that also factored in property and payroll.
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 and due April 15th of your scheduled year (based on when you formed). 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. Kansas eliminated the corporate levy for all tax years starting after December 31, 2010. You don't owe anything or need to file anything related to it.
What replaced the Kansas franchise tax?
Nothing. Kansas lawmakers decided not to create a replacement tax, choosing instead to stick with the existing corporate income, sales, payroll, and property taxes. You still need to stay on top of those obligations, but there's no successor.
Do I still need to file anything with Kansas if I do business there?
Yes. You must file a biennial report with the Kansas Secretary of State to maintain good standing, whether you're a domestic or foreign corporation, LLC, or LP. 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 January 1, 2027. This means your Kansas tax liability will depend primarily on sales made to Kansas customers rather than property or payroll in the state.
What are the consequences of not filing my Kansas annual reports?
Miss a report, and the Secretary of State can revoke your good-standing status. Once that happens, you may lose the ability to enter Kansas courts, secure financing, or obtain state licenses until you reinstate and pay any late fees or interest.
Kansas eliminated its franchise tax over a decade ago. However, businesses still face complex compliance requirements, such as biennial Secretary of State reports, the transition from corporate income tax to single sales factor apportionment, 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.
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