Kansas doesn’t tax every sale. Depending on what’s being sold and who’s buying, some sales qualify for exemption from Kansas’s 6.5% base sales tax rate. Knowing which sales are exempt can save a business substantial money over a year. Getting the paperwork right is equally important.

Below, we discuss who qualifies for a Kansas sales tax exemption, which products and services fall outside the tax base, and what records a seller needs to keep available in case of an audit.

Key takeaways

• Kansas grants sales tax exemptions based on who’s buying, what’s being sold, or both, and each type of exemption requires its own documentation.

• Groceries became fully exempt from Kansas’s state sales tax in January 2025, though local sales tax can still apply.

• Sellers must keep exemption certificates on file for at least three years; a missing certificate can leave a seller owing tax on a sale that was genuinely exempt.

What is a Kansas sales tax exemption?

A Kansas sales tax exemption removes a transaction from the state’s tax base entirely, so no state or local sales tax applies to it. Kansas’s base rate is 6.5%, and cities and counties add their own local rates on top, which can push combined totals past 10%.

Who qualifies for a Kansas sales tax exemption?

Kansas grants exemption certificates to specific categories of buyers. There are documentation requirements for each category below:

• Government entities: The federal government, the state of Kansas, and Kansas political subdivisions, such as cities, counties, and school districts, don’t pay Kansas sales tax on direct purchases. Federal government agencies don’t need to provide an exemption certificate, but state and local entities must provide the seller with a Sales and Use Tax Entity Exemption Certificate.

• Nonprofit and religious organizations: Groups organized under Internal Revenue Code Section 501(c)(3), along with certain elder care providers and blood banks, qualify once the Kansas Department of Revenue issues them a Sales and Use Tax Entity Exemption Certificate. This certificate includes a registration number, which the organization shows to sellers; the registration number needs periodic renewal.

• Resellers: A business buying inventory it plans to resell, rather than use itself, doesn’t pay sales tax on those purchases. The buyer certifies resale intent on a Resale Exemption Certificate, and the tax is collected later when the item reaches the end customer.

• Manufacturers: Machinery and equipment used directly in manufacturing, along with the raw materials and component parts that become part of a finished product, qualify for exemption. The exemption certificate they use depends on the specific situation, but commonly used options include Kansas’s Ingredient or Component Part Exemption Certificate and its Integrated Production Machinery and Equipment Exemption Certificate (Form ST-201).

• Agricultural producers: Farm machinery, equipment, and inputs used directly in producing crops or raising livestock for sale fall under their own exemption category, separate from the general manufacturing exemption. Form ST-28F (Kansas Agricultural Exemption Certificate) covers these exemptions.

Kansas is party to the Streamlined Sales and Use Tax Agreement, so a business registered in another member state can use the multistate Streamlined Sales Tax certificate instead of applying for a Kansas-specific one.

What products and services are exempt from sales tax in Kansas?

Groceries have been fully exempt from Kansas state sales tax since January 1, 2025. However, local sales tax on groceries can still apply depending on the city or county, which means a grocery bill in Kansas today might be subject to a low local rate even though the state sales tax is gone.

Prepared food, such as that sold in restaurants, and food bought through vending machines don’t qualify for the grocery exemption and remain fully taxable. Prescription drugs are exempt from state sales tax when dispensed under a prescription, while over-the-counter medications generally aren’t exempt unless a specific concession applies.

Beyond food and medicine, most of Kansas’s product exemptions cluster around production:

• Manufacturing inputs: Raw materials that become part of a finished product, along with machinery used directly in the manufacturing process, are exempt from state sales tax. Machinery used for administrative or general business purposes, such as office equipment in the same building, doesn’t qualify for exemption, even when a manufacturer owns it.

• Agricultural inputs: Seed, feed, fertilizer, and farm machinery used directly in producing crops or raising livestock for sale are exempt from state sales tax.

• Utilities used in production: Electricity, gas, and water used directly in a manufacturing or agricultural process can qualify for a state sales tax exemption.

A business selling a mix of taxable and exempt products must classify each item accordingly. Kansas doesn’t extend a universal sales tax exemption to all of a business’s products simply because a portion of its products qualify. Each product sold must be accompanied by an indication of taxes paid or an exemption certificate.

How do Kansas sales tax exemption certificates work?

In Kansas, the buyer claims the sales tax exemption and the seller collects the proper exemption certificate and keeps it on file. Kansas uses a numbered series of exemption certificate forms. When a buyer wants to claim an exemption, they fill out the right form, state the reason, and sign it. A construction company claiming a resale exemption on a truckload of lumber it seems likely to build with rather than resell is the kind of mismatch that might make a seller stop and ask questions before accepting the paperwork.

Entity-based exemptions work a bit differently. A nonprofit or government buyer needs a Kansas-issued tax exemption number before making an exempt purchase, and the seller records that number on the transaction. Kansas lets sellers check these numbers directly through the Department of Revenue’s exemption certificate verification tool; this is worth doing whenever a number looks off or a buyer places an unusually large order.

A single exemption certificate can cover one transaction. It can also be used as a blanket certificate, covering every future purchase of the same type between the same buyer and seller; it’s valid until something related to the exemption changes or the certificate expires or is revoked. Ongoing wholesale relationships typically run on a blanket certificate rather than fresh paperwork for each order.

What records must businesses keep for Kansas sales tax exemptions?

Kansas expects a seller to keep every exemption certificate it accepts. While the general retention window is three years from the date of the transaction, longer retention protects a business if an audit reaches back into older time periods. A missing certificate at audit time, even for a genuinely exempt sale, can leave the seller owing the uncollected tax out of pocket.

A few records matter most in this context:

• The sales tax exemption certificate itself: Complete with the buyer’s signature, the reason claimed, and for entity-based exemptions, the Kansas tax exemption number.

• Invoice-level documentation: Ties each exempt sale to the certificate on file so an auditor can trace a specific transaction back to real paperwork instead of a general customer exemption claim.

• Renewal tracking: Covers exemptions tied to a certificate that expires or needs periodic reconfirmation, particularly nonprofit tax exemption numbers.

Stripe Tax calculates and collects sales tax on Kansas transactions and can apply exemptions at checkout once a buyer’s exempt status is on record. This reduces reconciliation errors and prevents tax-exempt sales from being charged tax by accident. It doesn’t replace the underlying obligation to collect and store certificates correctly, but it takes over a layer of manual tracking for businesses that handle exempt and taxable sales side by side.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US, automate US filings in the Dashboard, and manage global filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, VAT, and GST on:

• Digital goods and services in all US states and over 100 countries
  
• Physical goods in all US states and 42 countries
  

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If you need to register for a sales tax in the US, let Stripe manage your tax registrations. You’ll benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations. If you need help registering outside of the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax automates US filings in the Dashboard, powered by TaxJar. For global filings, Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.

FAQs about Kansas sales tax exemptions