We investigate the equivariant cohomology of the natural torus action on a K-contact manifold and its relation to the topology of the Reeb flow. Using the contact moment map, we show that the equivariant cohomology of this action is Cohen-Macaulay, the natural substitute of equivariant formality for torus actions without fixed points. As a consequence, generic components of the contact moment map are perfect Morse-Bott functions for the basic cohomology of the orbit foliation F of the Reeb flow. Assuming that the closed Reeb orbits are isolated, we show that the basic cohomology of F vanishes in odd degrees, and that its dimension equals the number of closed Reeb orbits. We characterize K-contact manifolds with minimal number of closed Reeb orbits as real cohomology spheres. We also prove a GKM-type theorem for K-contact manifolds which allows to calculate the equivariant cohomology algebra under the nonisolated GKM condition.2010 Mathematics Subject Classification. 53D35, 53D20, 55N25.