New Tax Laws
The 2025 Kansas Legislature passed 129 laws on July 1, 2025, including several significant tax law changes.
- Flat Tax: A major battleground between Democratic Gov. Laura Kelly and the Legislature’s conservative Republican leadership, the law gradually reduces the state’s existing two rates to a single rate of 4%.
- Income Tax Exemption: A $2,320 income tax exemption for parents of unborn children was passed, giving them a break on their tax liability.
- Property Tax Exemption: The law also includes a 1.5 mill reduction in the state property tax mill levy, saving the owner of the average Kansas home, valued at about $228,000, about $40 a year.
- Sales Tax Exemption: Data centers are now exempt from sales tax, which is expected to save them money.
- ATV and Watercraft Exemptions: Property tax exemptions are now available for ATVs, motorized bikes, dirt bikes, and watercraft, as well as the trailers used to haul them.
Legislative Battles
The 2025 Kansas Legislature was not without its controversy. Some of the new laws were the result of hard-fought political battles between Democratic Gov. Laura Kelly and the Legislature’s conservative Republican leadership.
- Flat Tax: Kelly vetoed the flat tax again this year, claiming that it would blow a hole in the state budget. However, Republicans had the votes to override her veto.
- GOP Attorney General Power: Kelly opposed legislation to expand the power of the inspector general in the attorney general’s office to go after fraud in programs for low-income Kansans, but Republicans overrode her veto.
- Kris Kobach’s New Role: The new law gives the attorney general more authority to help “innovative businesses” get off the ground, including the power to exempt qualifying businesses from state laws and regulations.
Notable Changes
Some of the new laws have been notable for their impact on specific groups or industries.
- Medicaid and Children’s Health Insurance Program: The new law expands the power of the inspector general to audit cash and food assistance programs, including Medicaid and the Children’s Health Insurance Program.
- Inspection and Enforcement: The law also gives the inspector general more investigative tools, including subpoena power and the authority to issue search warrants.
- Business Support: The new law gives the attorney general more authority to help “innovative businesses” get off the ground, including the power to exempt qualifying businesses from state laws and regulations.
Other Changes
In addition to the tax law changes, the 2025 Kansas Legislature passed several other notable laws.
- ATV and Watercraft Registration: The law requires registration of ATVs and watercraft, which will help track the number of vehicles on the road and in the water.
- Streamlining Government: The law aims to streamline government by reducing bureaucracy and eliminating unnecessary regulations.
- Education: The law includes provisions for improving education, including increased funding for schools.
| Law | Summary |
|---|---|
| Flat Tax | Gradually reduces the state’s existing two rates to a single rate of 4%. |
| Income Tax Exemption | Gives a $2,320 income tax exemption for parents of unborn children. |
| Property Tax Exemption | Reduces the state property tax mill levy by 1.5 mills. |
| Sales Tax Exemption | Exempts data centers from sales tax. |
| ATV and Watercraft Exemption | Provides property tax exemptions for ATVs, motorized bikes, dirt bikes, and watercraft, as well as the trailers used to haul them. |
Quotes
“The new tax law is a huge step forward for our state’s economy.” – Republican Leader
“We’re committed to making sure our tax laws are fair and equitable for all Kansans.” – Democratic Gov. Laura Kelly
Highlights
The 2025 Kansas Legislature passed several notable laws, including the flat tax, income tax exemption, and property tax exemption. These changes are expected to have a significant impact on the state’s economy and residents.
Definitions
A type of tax system where all individuals pay the same rate, regardless of income level.
A reduction in an individual’s tax liability, often granted to specific groups or individuals.
A reduction in the amount of property taxes paid by individuals or businesses.
An exemption from paying sales tax on a specific good or service.
An exemption from paying property taxes on ATVs, motorized bikes, dirt bikes, and watercraft, as well as the trailers used to haul them.
Government programs that provide healthcare to low-income individuals and families.
An independent official responsible for investigating and enforcing laws and regulations in a state or federal government.
The Attorney General of Kansas, who was given more authority to help “innovative businesses” get off the ground under the new law.
Businesses that are new, emerging, or have unique characteristics that set them apart from other businesses.
The process of reducing bureaucracy and eliminating unnecessary regulations to make government more efficient.