Providing for a three-year exemption from severance tax for new oil and gas wells.

2025-2026 Regular Session

HB 2775 would temporarily waive Kansas severance tax for three years on production from newly drilled oil and gas wells to spur development.

Died in Committee

#taxation

Summary of HB 2775 (Kansas, 2025-2026)

Purpose and intent

HB 2775 proposes a temporary exemption from the Kansas severance tax for new oil and gas wells. The measure is designed to encourage exploration and development by reducing tax costs on new production for a defined period.

Key provisions

Tax exemption scope: A three-year exemption from the Kansas severance tax on oil and gas produced from newly drilled wells.

Applicability period: The exemption would apply for a three-year window beginning with the first date of production from qualifying new wells. ( Specific start and end dates would be defined in the bill’s text and any implementing rules.)

Eligible wells: New oil and gas wells drilled within the state that meet standard regulatory requirements and are classified under Kansas severance tax rules as producing wells.

Tax base and rate interaction: The exemption reduces or waives severance tax obligations for a three-year period for qualifying production; after the three-year window, production from the same wells would be taxed under the existing severance tax regime.

Administration: Provisions would align with existing state tax administration processes, including reporting, certification of qualification, and compliance requirements for operators or producers.

Subjects Affected

Industry: Oil and gas producers and operators drilling new wells in Kansas.

State government: Department or agency responsible for tax collection and administration (via statutory severance tax administration).

Occasional fiscal impact on state revenue: Short-term reduction in severance tax receipts from newly exempt wells.

Procedural and timeline aspects

Introduction and referral: HB 2775 was introduced and referred to the House Committee on Taxation on February 12, 2026.

Committee action: The bill was reported out of the committee as part of the legislative process (specific approvals or amendments would be recorded in committee minutes).

Status: Died in Committee on April 10, 2026, meaning it did not advance to the floor for a full chamber vote and is no longer actively moving through the legislative process in this session.

Potential impact and considerations

Economic impact: If enacted, the 3-year exemption could reduce operating costs for operators of new wells, potentially encouraging more drilling activity and early production growth. The magnitude would depend on the number of new wells and the severance tax rate in effect during the exemption period.

Revenue considerations: Short-term loss in severance tax revenue for the state during the exemption window; long-term effects would depend on whether increased production offsets the temporary tax relief.

Policy considerations: The measure targets new development to stimulate industry growth, and its temporary nature aims to limit long-term fiscal impact while providing an incentive during a defined period.

Notes

The bill did not pass out of committee in this session, so it did not become law. If reintroduced in a future session, it would follow the same general framework but would require updates to reflect current tax rates, revenue projections, and statutory prerequisites.