Kansas Has Specialized Oil & Gas Taxation

Kansas and the Oil and Gas Industry

Kansas has a significant oil and gas industry, particularly in the central and western parts of the state. Because oil and gas properties are unique, complex, and difficult to value using conventional real estate methods, Kansas has developed a highly specialized system for taxing these properties.

Unlike most real property in Kansas — which is valued by the county appraiser using standard appraisal methods — oil and gas properties are valued using state-published guides issued annually by the Kansas Property Valuation Division.

Types of Oil and Gas Property Taxed in Kansas

• Oil and Gas Leaseholds — Oil and gas leasehold interests are personal property in Kansas. The leasehold interest — not the mineral rights themselves — is the taxable interest in most cases. Valued using state-published PVD guides based on production volume and commodity prices. The assessment rate on oil and gas may change based on the production volume of the well — leaseholds where gas production is ≤ 100 mcf or oil production is < 5 barrels per day are assessed at 25%. For more information about oil and gas leasehold interests, see K.S.A. 79-329.
• Royalty Interests — A royalty is the landowner’s share of production revenue, paid by the operator regardless of well costs. In Kansas, royalty interests are always assessed at 30%, regardless of production volume or commodity type.
• Gathering Systems — The network of smaller pipelines that collects oil and gas at the wellhead and moves it to processing facilities. Gathering systems are classified as real property, valued by the county appraiser using PVD-published guides, and assessed at 25%.
• Refineries and Processing Facilities — Oil refineries and gas processing plants are valued as commercial-industrial real property. The complex equipment and structures are assessed at 25%.
• Surface Equipment (Personal Property) — Wellhead equipment, pump jacks, tanks, separators, and other itemized surface equipment used in production are taxed as personal property at 30%, using state-published depreciation guides.

State-Published Valuation Guides

The Kansas Property Valuation Division publishes annual guides used to value oil and gas properties. These guides provide:

Kansas’s Unique Position

Kansas maintains one of the most detailed and sophisticated oil and gas property tax systems in the midcontinent region. The use of centralized, state-published guides ensures that oil and gas properties are valued consistently across all 105 counties — regardless of whether the local county appraiser has specialized expertise in the energy sector.