In the seismic design of steel moment-resisting frames (MRFs), the panel zone region can significantly affect overall ductility and energy-dissipation capacity. This study investigates the influence of panel zone flexibility on the seismic response of steel MRFs by comparing two modeling approaches: one with a detailed panel zone representation and the other considering fixed beam-column connections. A total of 30 2D steel MRFs (15 frames incorporating panel zone modeling and 15 frames without panel zone modeling) are subjected to nonlinear time-history analyses using four suites of ground motions compatible with Eurocode 8 (EC8) soil types (A, B, C, and D). Structural performance is evaluated at three distinct performance levels, namely, damage limitation (DL), life safety (LS), and collapse prevention (CP), to capture a wide range of potential damage scenarios. Based on these analyses, the study provides information about the seismic response of these frames. Also, lower-bound, upper-bound, and mean values of behavior factor (q) for each soil type and performance level are displayed, offering insight into how panel zone flexibility can alter a frame's inelastic response under seismic loading. The results indicate that neglecting panel zone action leads to an artificial increase in frame stiffness, resulting in higher base shear estimates and an overestimation of the seismic behavior factor. This unrealistically increased behavior factor can compromise the accuracy of the seismic design, even though it appears conservative. In contrast, including panel zone flexibility provides a more realistic depiction of how forces and deformations develop across the structure. Consequently, proper modeling of the panel zone supports both safety and cost-effectiveness under strong earthquake events.