Updated October 5, 2026. Quick answer: Yes. Kansas taxes interest and dividends as part of federal adjusted gross income on a two-rate schedule of “5.2% (.052)” and “5.58% (.0558)”. Interest on other states’ bonds is added back and U.S. obligation interest is subtracted.
How Kansas treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed on the two-rate schedule |
| 2025 rates | 5.2% on taxable income up to $23,000 (single, head of household, married filing separate) or $46,000 (joint), and 5.58% above that |
| Other states’ bonds | Schedule S adds “State and municipal bond interest not specifically exempt from Kansas income tax” |
| Kansas bonds | “Do not include interest income on obligations of the state of Kansas” issued after 12/31/87; for a fund holding both, “only the Kansas bonds are exempt.” |
| U.S. obligations | Subtracted: “LINE A12: Interest on U.S. Government obligations.” |
| Agency securities | Interest from “Federal National Mortgage Association (FNMA); Government National Mortgage Association” and FHLMC is taxable to Kansas |
A $20,000 example
Taxable dividends and interest of $20,000 taxed wholly at 5.2% would add $20,000 x 5.2% = $1,040; taxed wholly at 5.58%, $20,000 x 5.58% = $1,116. Income above $23,000 for a single filer reaches the higher rate.
What changes in 2026
The 2025 booklet prints no 2026 rate change.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Kansas taxes capital gains, whether Kansas taxes pensions, how Kansas taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 Kansas Individual Income Tax Booklet (IP25): https://www.ksrevenue.gov/pdf/ip25.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.