Does Kansas have a capital gains tax?
Yes. Kansas capital gains tax is part of the state income tax, and gains are taxed at the same rates as wages: 5.2% and 5.58% for 2026. Kansas adjusted gross income starts from federal adjusted gross income under K.S.A. 79-32,117, so every dollar of gain on your federal return, including depreciation recapture, flows into the Kansas return.
Kansas has no capital gains exclusion for real estate. The only gain-related subtraction in the statute that applies to real property is a narrow one for property whose Kansas basis is higher than its federal basis. For a typical Wichita or Overland Park apartment sale, the state takes about 5.58% of the gain.
Kansas income tax rates for 2026
Kansas has two income tax brackets. Senate Bill 1, passed in the 2024 special session, set 5.2% on the first $23,000 of Kansas taxable income for single filers and $46,000 for married couples filing jointly, and 5.58% above that, starting with tax year 2024.
The same law raised the personal exemption for 2024 to $9,160 for single filers and $18,320 for joint filers, plus $2,320 per dependent. Those amounts barely move the needle on a building sale: with a gain in the hundreds of thousands, almost all of it sits in the 5.58% bracket.
| Kansas taxable income (2026) | Single and other filers | Married filing jointly |
|---|---|---|
| 5.2% | Up to $23,000 | Up to $46,000 |
| 5.58% | Over $23,000 | Over $46,000 |
Why Kansas did not cut its rate for 2026
Senate Bill 269, passed in 2025, set up automatic income tax cuts when two tests are met: the Budget Stabilization Fund must hold at least 15% of prior-year tax receipts, and adjusted general fund collections must beat an inflation-adjusted base. In Notice 25-06, dated October 2, 2025, the Kansas Department of Revenue said fiscal 2025 collections fell about $88.5 million short, so there is no rate reduction for tax year 2026.
The department’s Notice 26-11, dated October 15, 2026, says the same for 2027: fiscal 2026 collections missed the target by $214,339,364, even though the stabilization fund held about 20.4%. If you are deciding between closing in late 2026 or early 2027, the Kansas rate is 5.58% either way.
How Kansas treats depreciation recapture
Kansas taxes all parts of a building gain the same way. Federal law splits the gain into Section 1245 recapture, unrecaptured Section 1250 gain and the rest, with different federal rates for each. Kansas starts from federal AGI, where all three are already included, and applies its own two brackets without any distinction.
That makes Kansas planning simpler than in states with partial exclusions. A cost segregation study changes your federal tax on the sale, because Section 1245 recapture is taxed at ordinary federal rates, but it does not change the Kansas rate on any of it.
| Part of the gain | Federal rate (2026) | Kansas rate (2026) |
|---|---|---|
| Appreciation above original cost (held over a year) | 0%, 15% or 20% | 5.2% / 5.58% |
| Straight-line depreciation (unrecaptured 1250 gain) | Up to 25% | 5.2% / 5.58% |
| Section 1245 recapture on personal property | Ordinary rates up to 37% | 5.2% / 5.58% |
| Net investment income tax | 3.8% above the thresholds | None |
How Kansas tax stacks on federal tax
The Kansas tax comes on top of federal tax, and on a large sale it is a real share of the total. For 2026, IRS Revenue Procedure 2025-32 sets the 20% long-term capital gains rate above $613,700 of taxable income for joint filers and $545,500 for single filers, with 0% up to $98,900 joint and 15% in between.
Federal ordinary brackets for joint filers run from 10% to 37%, with 24% up to $403,550 and 32% up to $512,450. Unrecaptured Section 1250 gain is taxed at the lower of your ordinary rate or 25%. The 3.8% net investment income tax applies once modified adjusted gross income passes $250,000 joint or $200,000 single.
Worked example: selling a $2 million apartment building in Kansas
A married couple in Johnson County sells a 26-unit building in Overland Park for $2,000,000 in 2026. Selling costs are $100,000, so the amount realized is $1,900,000. They paid $1,250,000 and have taken $400,000 of depreciation: $340,000 straight-line on the building and $60,000 on personal property. Adjusted basis is $850,000 and the gain is $1,050,000. Their other taxable income is $380,000.
Federal tax: the $60,000 of Section 1245 recapture spans the 24% and 32% brackets, for $17,316. The $340,000 of unrecaptured Section 1250 gain is taxed at 25%, or $85,000. The remaining $650,000 sits above the $613,700 threshold and is taxed at 20%, or $130,000. The 3.8% net investment income tax on the full gain adds $39,900. Federal tax is $272,216.
Kansas tax: their other income already fills the 5.2% bracket, so the whole $1,050,000 gain is taxed at 5.58%, or $58,590. Their combined bill is about $330,806, roughly 17.4% of the amount realized, and the Kansas share is about 18% of the total.
Run your own figures through the capital gains tax calculator and add 5.58% of the gain for the Kansas piece.
| Item | Amount |
|---|---|
| Amount realized | $1,900,000 |
| Total gain | $1,050,000 |
| Federal tax | $272,216 |
| Kansas tax (5.58%) | $58,590 |
| Total tax | $330,806 |
Short-term and long-term gains in Kansas
Kansas taxes short-term and long-term gains at the same 5.2% and 5.58% rates. The holding period changes only the federal tax. A building held one year or less produces short-term gain taxed at ordinary federal rates up to 37%, while a building held longer gets the 0%, 15% and 20% rates on appreciation and up to 25% on straight-line depreciation.
For a Kansas owner, then, holding a few extra months past the one-year mark can save a lot federally and nothing at the state level. Owners who flip a building inside a year should budget for the full Kansas rate on top of ordinary federal rates.
Selling through an LLC or partnership in Kansas
Most Kansas apartment buildings are held in an LLC taxed as a partnership, and the gain on a sale flows through to the members on their Schedule K-1s. Each member reports the gain on a personal Kansas return and pays at 5.2% and 5.58%, the same as if the building were owned directly.
Members who live outside Kansas still owe Kansas tax on their share of the gain from a Kansas building. If the LLC has several out-of-state members, ask the preparer early how the Kansas filings will be handled, so the K-1s and state returns are ready when the sale closes.
Selling outright vs exchanging: the Kansas numbers
Using the worked example above, the difference between a plain sale and a full exchange is the whole $330,806 in the year of sale. A partial exchange that leaves $100,000 of cash in your pocket would trigger tax on that $100,000, and at 5.58% the Kansas share of it would be $5,580.
| Choice | Federal tax now | Kansas tax now |
|---|---|---|
| Plain sale | $272,216 | $58,590 |
| Full 1031 exchange | $0 | $0 |
| Exchange with $100,000 cash boot | Tax on $100,000 | $5,580 |
How a 1031 exchange changes the picture in Kansas
A 1031 exchange defers both the federal and the Kansas tax, because Kansas follows federal adjusted gross income. In the example, a full exchange into a replacement of $2,000,000 or more would defer all $330,806, including the $58,590 Kansas would otherwise collect.
That makes an exchange worth more in Kansas than in states with a capital gains exclusion. Any cash you keep or debt relief you do not replace is boot, taxed federally and at 5.58% in Kansas for most sellers. Kansas has no clawback, so a replacement in Missouri, Oklahoma or Texas files nothing extra with Kansas. Our guide to the 1031 exchange in Kansas covers the state details, and the 1031 exchange rules page covers the 45-day and 180-day deadlines.
Nonresidents and Kansas City sellers
Kansas taxes gain on real property located in Kansas, so a Missouri resident who sells a building in Kansas City, Kansas or Olathe files a Kansas nonresident return and pays Kansas tax on that gain. Missouri now lets individuals subtract capital gain from Missouri income, so for many Kansas City-area owners on the Missouri side the Kansas bill may be the main state tax on the sale. Confirm the Missouri side with your preparer.
A Kansas resident who sells a building across the line in Missouri reports the gain to Kansas as well. Ask your preparer how a credit for tax paid to another state works in your case. Ask your title company early whether any state paperwork applies at closing.
Ways to manage Kansas tax on a sale
With one flat-looking rate on nearly all of a gain, Kansas planning is mostly about timing and deferral.
- Use a 1031 exchange or a Delaware statutory trust to defer both federal and Kansas tax.
- Consider an installment sale, which spreads federal and Kansas gain over the years you collect principal; recapture is still reported in the year of sale.
- Check your Kansas basis records. If your Kansas basis is higher than federal basis for any reason, the K.S.A. 79-32,117 subtraction may apply to the difference.
- Watch the rate trigger notices each October, since a future cut would lower the 5.58% rate.
- Gather your depreciation schedules and closing statements from the purchase and every major improvement, so the gain on both returns is figured from the right basis and you do not pay Kansas tax on gain you do not have.
Selling a Kansas apartment building to Skyline
Skyline buys apartment buildings with five or more units in Kansas, from Wichita and Topeka to Lawrence, Manhattan and the Johnson County suburbs. We buy directly, close on your timeline, and can work inside 1031 deadlines. A firm closing date helps your CPA plan the federal and Kansas sides together.
For the tax a buyer will carry after closing, see property tax rate in Kansas. For tenant rules that come with the building, see Kansas landlord-tenant law for apartment owners.
Selling? Spread the tax with seller-carry terms
If a large tax bill is what is keeping you from selling, an installment sale may help. When you carry part of the price as a note, the gain is generally reported as you receive payments instead of all in the year of sale. Some parts of the gain, such as certain depreciation recapture, can still be due up front, so run the numbers with your CPA first.
Skyline Capital Investments buys apartment buildings with five or more units and can offer seller-carry terms, or a delayed closing that fits your 1031 timeline. Send the address and unit count and we typically respond within 48 hours. How seller financing works · How an installment sale is taxed · Seller financing calculator.
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