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Session of 2026
SENATE BILL No. 488
By Committee on Federal and State Affairs
2-5
AN ACT concerning taxation; enacting the Kansas property tax freedom
act of 2026; providing for the phased elimination of property taxation;
maintaining existing payments in lieu of taxes for renewable energy
facilities; providing revenue replacement grants to taxing subdivisions;
establishing the Kansas fair share purchase surcharge and the property
tax freedom reserve fund; providing for the distribution of Kansas fair
share purchase surcharge revenue to school districts, counties, cities,
townships and other taxing subdivisions, the state general fund and the
property tax freedom reserve fund; providing for a voter-approved local
add-on fair share purchase surcharge for debt service of general
obligation bonds; providing for freedom dividend rebates.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) Sections 1 through 8, and amendments thereto, shall be
known and may be cited as the Kansas property tax freedom act of 2026.
(b) If a proposition to amend section 1 of article 11 of the constitution
of the state of Kansas to prohibit the levy of any property taxes, except for
taxable years 2026 and 2027 as provided by law for any phased
elimination of property taxes, is approved by the electors of this state at
the general election held in November 2026 or at a special election at a
sooner date, the secretary of state shall certify the result of the election and
cause a notice of such certification to be published in the Kansas register.
The provisions of this act shall not become law if such proposition is not
approved by the electors of this state.
Sec. 2. For the purposes of this act:
(a) "Act" means the Kansas property tax freedom act of 2026.
(b) "Director of taxation" means the director of taxation pursuant to
K.S.A. 75-5102, and amendments thereto.
(c) "Kansas fair share purchase surcharge" means the transaction-
based surcharge imposed by section 4, and amendments thereto.
(d) "Municipality" means any county, city, township, municipal
university, school district and any other political subdivision of the state.
(e) "Retail purchase" means the sale of tangible personal property or
taxable services to a final consumer for any purpose other than resale in
the regular course of business, including purchases shipped to a Kansas
address.
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(f) "Taxable services" means services that are subject to the Kansas
retailers' sales tax pursuant to K.S.A. 79-3603, and amendments thereto.
(g) "Taxing subdivision" means any county, city, township, municipal
university, school district and any other taxing district or subdivision of the
state levying property taxes prior to January 1, 2028.
Sec. 3. Elimination of property taxes. (a) Notwithstanding any
provisions of law to the contrary:
(1) For tax year 2026, no taxing subdivision shall certify a mill levy
that exceeds 50% of the mill levy certified by such taxing subdivision for
tax year 2025;
(2) for tax year 2027, no taxing subdivision shall certify a mill levy
that exceeds 25% of the mill levy certified by such subdivision for tax year
2025; and
(3) for tax year 2028 and all tax years thereafter, the levy of any
property tax on real property or personal property is prohibited.
(b) The secretary of revenue shall calculate the loss of property tax
revenue caused by the levy limitations provided in subsection (a)(1) and
(2), including full debt service on existing general obligation bonds, for
each taxing subdivision and provide a certification of such amounts to the
state treasurer. Subject to the availability of funds in the property tax
freedom reserve fund, the state treasurer shall provide revenue
replacement grants from the property tax freedom reserve fund to each
taxing subdivision in an amount equal to the loss of property tax revenue
caused by the levy limitations provided in subsection (a)(1) and (2),
including full debt service on existing general obligation bonds, of each
taxing subdivision as certified by the secretary of revenue. Once funds
become available in the property tax freedom reserve fund, such revenue
replacement grants shall be made at least quarterly and may be made in
installments as funds become available in the property tax freedom reserve
fund.
Sec. 4. Kansas fair share purchase surcharge imposed. (a) Beginning
on January 1, 2027, in addition to all other taxes, there is hereby imposed a
surcharge on every retail purchase in this state as follows:
(1) If the purchase price is $20.00 or more, a flat surcharge of $1.60
per transaction.
(2) If the purchase price is less than $20.00, a surcharge of 7.6% of
the purchase price.
(b) The surcharge shall be paid by the consumer or purchaser,
collected by the retailer at the point of sale and remitted to the department
of revenue in the same manner as the Kansas retailers' sales tax and
Kansas compensating tax.
(c) All moneys collected under the provisions of this section shall be
remitted by the director of taxation to the state treasurer in accordance
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with the provisions of K.S.A. 75-4215, and amendments thereto. Upon
receipt of each such remittance, the state treasurer shall deposit the entire
amount in the state treasury to the credit of the Kansas fair share purchase
surcharge fund, which fund is hereby established in the state treasury. All
moneys credited to the Kansas fair share purchase surcharge fund shall be
apportioned and distributed in the manner provided in section 8, and
amendments thereto. Any refund due on any surcharge collected pursuant
to this section shall be paid out of the Kansas fair share purchase surcharge
refund fund, which is hereby established in the state treasury, and
reimbursed by the director of taxation from collections of the surcharge
authorized by this section.
(d) The surcharge imposed pursuant to this section shall be in
addition to any applicable state or local sales and compensating use taxes
and state excise taxes. The retailers' sales tax exemption of K.S.A. 79-
3606(a), and amendments thereto, shall not be implicated by the
imposition of the surcharge pursuant to this section.
Sec. 5. Exemptions from the Kansas fair share purchase surcharge.
(a) The surcharge imposed by section 4, and amendments thereto, and any
local add-on surcharge pursuant to section 7, and amendments thereto,
shall not apply to retail purchases of the following:
(1) Grocery food or food ingredients eligible under the federal
supplemental nutrition assistance program (SNAP);
(2) prescription drugs and medical devices;
(3) motor fuel subject to tax under article 34 of chapter 79 of the
Kansas Statutes Annotated, and amendments thereto;
(4) residential rent or mortgage payments;
(5) utility services of electricity, natural gas, water, sewer and trash
removal;
(6) child care services and K-12 tuition; and
(7) property purchased for resale or as component parts in the regular
course of business.
(b) Statutory exemptions from the Kansas retailers' sales tax shall not
apply to the Kansas fair share purchase surcharge.
Sec. 6. Protection of renewable energy PILOT agreements. (a) No
provision of this act shall reduce, impair or terminate any existing payment
in lieu of taxes (PILOT) agreement entered into by a commercial wind
energy facility.
(b) Any commercial solar energy facility receiving a property tax
exemption shall continue any existing PILOT agreement or make
minimum payments during any remaining exemption period in an amount
equal to at least 50% of the exempt assessed value multiplied by the tax
year 2025 mill levy.
(c) All existing renewable energy PILOT obligations remain in full
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force and effect.
Sec. 7. Local general obligation bonds. (a) After December 31, 2027,
any municipality may issue general obligation bonds for capital
improvements only if approved by a majority of the electors of such
municipality voting at an election called and held thereon.
(b) Debt service on such bonds shall be paid exclusively from:
(1) A local add-on surcharge to the Kansas fair share purchase
surcharge that is applicable only within the boundaries of the issuing
municipality if such local add-on surcharge is approved by a majority of
the electors of such municipality voting at an election called and held
thereon; or
(2) other dedicated local revenue sources such as user fees or special
assessments.
(c) Elections shall be called and held in the manner provided by
K.S.A. 10-120, and amendments thereto.
(d) No revenue from the statewide Kansas fair share purchase
surcharge imposed pursuant to section 4, and amendments thereto, shall be
used for debt service on such bonds issued after December 31, 2027.
(e) The department of revenue shall administer the collection and
distribution of any voter-approved local add-on surcharge. All moneys
collected under the provisions of this section shall be remitted by the
director of taxation to the state treasurer in accordance with the provisions
of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
remittance, the state treasurer shall deposit the entire amount in the state
treasury to the credit of the Kansas local add-on fair share purchase
surcharge fund, which fund is hereby established in the state treasury. Any
refund due on any surcharge collected pursuant to this section shall be paid
out of the Kansas local add-on fair share purchase surcharge refund fund,
which is hereby established in the state treasury, and reimbursed by the
director of taxation from collections of the surcharge authorized by this
section. All moneys in the Kansas local add-on fair share purchase
surcharge fund shall be remitted at least quarterly by the state treasurer, on
instruction from the director of taxation, to the treasurers of such
municipalities that imposed such local add-on surcharge.
Sec. 8. Distribution of surcharge revenue, freedom dividend rebates
and surplus use. (a) The Kansas fair share purchase surcharge revenue
pursuant to section 4, and amendments thereto, in the Kansas fair share
purchase surcharge fund shall be apportioned and distributed at least
quarterly by the state treasurer as follows:
(1) 48% to school districts in the same proportions as tax year 2025
property tax revenue;
(2) 35% to counties, cities, townships and other taxing subdivisions
excluding school districts, in the same proportions as tax year 2025
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property tax revenue;
(3) 12% to the state general fund; and
(4) 5% to the property tax freedom reserve fund.
(b) (1) There is hereby created in the state treasury the property tax
freedom reserve fund.
(2) The state treasurer is hereby authorized to distribute moneys from
the property tax freedom reserve fund for the purposes of revenue
replacement grants related to tax years 2026 and 2027 pursuant to section
3(b), and amendments thereto, and freedom dividend rebates pursuant to
paragraphs (3) and (4).
(3) After the distribution of revenue replacement grants pursuant to
section 3(b), and amendments thereto, is complete, the state treasurer shall
monitor the balance of the property tax freedom reserve fund on December
31 of each year and provide notice of such balance to the legislature on or
before January 15 of each year. If the balance in the property tax freedom
reserve fund exceeds $500,000,000 on any December 31, the funds
exceeding $500,000,000 shall be rebated to resident individual taxpayers
that are subject to Kansas income tax as provided in subsection (d). The
rebate shall be known and may be cited as the freedom dividend. The
legislature may also provide by law for future reductions in the Kansas fair
share purchase surcharge or changes in the apportionment.
(4) In the event that there are excess funds over $500,000,000 in the
property tax freedom reserve fund as provided in paragraph (3), there shall
be a freedom dividend rebate for qualified Kansas resident individual
taxpayers. To qualify for the rebate, a resident individual taxpayer shall
have timely filed such taxpayer's Kansas individual income tax return for
the most recent tax year as a Kansas resident for the entire tax year. The
rebate amount shall be calculated based on the amount of funds exceeding
$500,000,000 in the property tax freedom reserve fund to be rebated
divided by the total number of qualified Kansas resident individual
taxpayers. For purposes of the rebate, taxpayers who filed a return with a
married filing jointly filing status shall be treated as two taxpayers who
may qualify for a rebate, so that each person shall receive a rebate. The
state treasurer shall consult with the secretary of revenue to verify the list
of qualified Kansas resident individual taxpayers.
(5) Any other distributions or expenditures from the property tax
freedom reserve fund shall be made solely in accordance with statutory
authority or appropriation acts of the legislature.
Sec. 9. This act shall take effect and be in force from and after the
date of publication in the Kansas register of the notice prescribed in
section 1 and its publication in the statute book.
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