Kansas 2023-2024 Regular Session

Kansas House Bill HB2798 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	Session of 2024
2	2	HOUSE BILL No. 2798
3	3	By Committee on Taxation
4	4	Requested by Eric Stafford on behalf of the Kansas Chamber of Commerce
5	5	2-13
6	6	AN ACT concerning taxation; relating to income and privilege taxes;
7	7	providing for the apportionment of business income by the single sales
8	8	factor and the apportionment of financial institution income by the
9	9	receipts factor; establishing for deductions from income when using the
10	10	single sales factor and receipts factor; providing for the decrease in
11	11	corporate income tax rates; amending K.S.A. 79-1129 and 79-3279 and
12	12	K.S.A. 2023 Supp. 79-32,110 and repealing the existing sections.
13	13	Be it enacted by the Legislature of the State of Kansas:
14	14	New Section 1. (a) Commencing with fiscal year 2026, the director of
15	15	the budget, in consultation with the director of legislative research, shall
16	16	certify, at the end of each such fiscal year, the amount of actual corporate
17	17	income tax receipt revenues generated pursuant to K.S.A. 79-32,110(c),
18	18	and amendments thereto, that is in excess of the prior fiscal year's
19	19	corporate income tax receipts. The director of the budget shall transmit
20	20	such certification to the secretary of revenue. Upon receipt of such
21	21	certification, the secretary shall compute the reduction of the corporate
22	22	income tax rate pursuant to K.S.A. 79-32,110(c), and amendments thereto.
23	23	The certified amount shall be computed in dollars by the secretary for a
24	24	reduction rounded down to the nearest 0.1% in the corporate income tax
25	25	rate, if any, to go into effect for the next calendar year that would reduce
26	26	the corporate income tax rate in an amount approximately equal to the
27	27	amount computed by the secretary. The secretary shall reduce the normal
28	28	tax on corporations. Such rate reductions shall remain in effect unless
29	29	further reduced pursuant to law.
30	30	(b) The secretary shall publish by October 1, 2026, the new income
31	31	tax rates to take effect on January 1, 2027.
32	32	Sec. 2. K.S.A. 79-1129 is hereby amended to read as follows: 79-
33	33	1129. (a) Except as otherwise specifically provided, a financial institution
34	34	whose business activity is taxable both within and without this state shall
35	35	allocate and apportion its net income as provided in this act. All items of
36	36	nonbusiness income, income which is not includable in the apportionable
37	37	income tax base, shall be allocated pursuant to the provisions of K.S.A.
38	38	79-3274 through 79-3278 and amendments thereto. A financial institution
39	39	organized under the laws of a foreign country, the commonwealth of
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75	75	Puerto Rico, or a territory or possession of the United States whose
76	76	effectively connected income, as defined under the federal internal revenue
77	77	code, is taxable both within this state and within another state, other than
78	78	the state in which it is organized, shall allocate and apportion its net
79	79	income as provided in this act and its apportionment factors shall include
80	80	the part of its property, payroll and receipts that is related to its
81	81	apportionable income.
82	82	(b) (1) For taxable years prior to January 1, 2026, all business
83	83	income shall be apportioned as follows:
84	84	(A) All business income, income which is includable in the
85	85	apportionable income tax base, shall be apportioned to this state by
86	86	multiplying such income by the apportionment percentage. The
87	87	apportionment percentage is determined by adding the taxpayer's receipts
88	88	factor, as described in K.S.A. 79-1130, and amendments thereto, property
89	89	factor, as described in K.S.A. 79-1131, and amendments thereto, and
90	90	payroll factor, as described in K.S.A. 79-1132, and amendments thereto,
91	91	together and dividing the sum by three. If one of the factors is missing, the
92	92	two remaining factors are added and the sum is divided by two. If two of
93	93	the factors are missing, the remaining factor is the apportionment
94	94	percentage. A factor is missing if both its numerator and denominator are
95	95	zero, but it is not missing merely because its numerator is zero.
96	96	(B) (i) For tax years commencing December 31, 2023, and ending
97	97	before January 1, 2026, at the election of the taxpayer, all business income
98	98	that is includable in the apportionable income tax base, may be
99	99	apportioned to this state by the taxpayer's receipts factor, as described in
100	100	K.S.A. 79-1130, and amendments thereto.
101	101	(ii) An election under this subparagraph shall be made by including
102	102	a statement with the original tax return for which the election is made
103	103	indicating that the taxpayer elects to apply this apportionment method.
104	104	The election shall be effective and irrevocable for the taxable year of the
105	105	election and shall be binding on all members of a unitary group of
106	106	corporations.
107	107	(2) For tax years commencing December 31, 2025, all business
108	108	income shall be apportioned to this state by multiplying the business
109	109	income by the receipts factor.
110	110	(c) Each factor shall be computed according to the method of
111	111	accounting, cash or accrual basis, used by the taxpayer for the taxable year.
112	112	(d) If the allocation and apportionment provisions of this act do not
113	113	fairly represent the extent of the taxpayer's business activity in this state,
114	114	the taxpayer may petition for or the secretary of revenue may require, in
115	115	respect to all or any part of the taxpayer's business activity, if reasonable:
116	116	(1) Separate accounting;
117	117	(2) the exclusion of any one or more of the factors;
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161	161	(3) the inclusion of one or more additional factors which will fairly
162	162	represent the taxpayer's business activity in this state; or
163	163	(4) the employment of any other method to effectuate an equitable
164	164	allocation and apportionment of the taxpayer's income.
165	165	(e) In the event a combined report is utilized to determine the Kansas
166	166	income attributable to a unitary group of financial institutions, the
167	167	financial institutions in the combined group shall include only those
168	168	institutions which have a branch or office in Kansas.
169	169	(f) (1) There shall be allowed as a deduction an amount computed in
170	170	accordance with this subsection.
171	171	(2) As of July 1, 2024, only publicly traded companies, including
172	172	affiliated corporations participating in the filing of a publicly traded
173	173	company's financial statements prepared in accordance with generally
174	174	accepted accounting principles, shall be eligible for this deduction.
175	175	(3) If the provisions of this section result in an aggregate increase in
176	176	the taxpayer's net deferred tax liability or an aggregate decrease in the
177	177	taxpayer's net deferred tax asset, or an aggregate change from a net
178	178	deferred tax asset to a net deferred tax liability, the taxpayer shall be
179	179	entitled to a deduction, as determined in this subsection.
180	180	(4) A taxpayer shall be entitled to a deferred tax impact deduction
181	181	from the taxpayer's entire net income equal to the amount necessary to
182	182	offset the increase in the net deferred tax liability or decrease in the net
183	183	deferred tax asset, or aggregate change from a net deferred tax asset to a
184	184	net deferred tax liability. Such increase in the net deferred tax liability,
185	185	decrease in the net deferred tax asset or the aggregate change from a net
186	186	deferred tax asset to a net deferred tax liability shall be computed based
187	187	on the change that would result from the imposition of the single sales
188	188	factor requirements pursuant to this section, excluding the deduction
189	189	provided under this paragraph, as of the end of the tax year prior to the
190	190	year in which the taxpayer makes an election or is required to apportion
191	191	by the sales factor. The amount of the deduction shall equal the annual
192	192	deferred tax deduction amount set forth in paragraph (5).
193	193	(5) The annual deferred tax deduction amount shall be calculated as
194	194	follows:
195	195	(A) The deferred tax impact determined in paragraph (4) shall be
196	196	divided by the income tax rate for corporations in effect for the tax year
197	197	pursuant to K.S.A. 79-32,110, and amendments thereto;
198	198	(B) the resulting amount shall be further divided by the Kansas
199	199	apportionment factor that was used by the taxpayer in the calculation of
200	200	the deferred tax assets and deferred tax liabilities as provided in this
201	201	subsection; and
202	202	(C) the result multiplied by
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204	204	/10 shall represent the total net deferred
205	205	tax deduction available for the 2027 tax year and the next nine successive
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249	249	tax years.
250	250	(6) The deduction calculated under paragraph (5) shall not be
251	251	adjusted as a result of any events subsequent to such calculation,
252	252	including, but not limited to, any disposition or abandonment of assets.
253	253	Such deduction shall be calculated without regard to any tax liabilities
254	254	under the federal internal revenue code and shall not alter the tax basis of
255	255	any asset. If the deduction under this section is greater than the taxpayer's
256	256	Kansas adjusted gross income, any excess deduction shall be carried
257	257	forward and applied as a deduction for future tax years until fully utilized.
258	258	(7) At the discretion of the taxpayer, the taxpayer may be allowed to
259	259	claim other available tax credits before claiming the deferred tax
260	260	deduction calculated under this section. Any taxpayer intending to claim a
261	261	deduction under this subsection shall file a statement with the secretary on
262	262	or before July 1 of the year after the first tax year for which a single sales
263	263	factor is required. Such statement shall specify the total amount of the
264	264	deduction that the taxpayer claims on such form and in such manner as
265	265	prescribed by the secretary. No deduction shall be allowed under this
266	266	paragraph for any tax year unless claimed on such timely filed statement
267	267	in accordance with this paragraph.
268	268	(8) For purposes of this subsection:
269	269	(A) "Net deferred tax liability" means deferred tax liabilities that
270	270	exceed the deferred tax assets of the taxpayer, as computed in accordance
271	271	with generally accepted accounting principles.
272	272	(B) "Net deferred tax asset" means that deferred tax assets exceed the
273	273	deferred tax liabilities of the taxpayer, as computed in accordance with
274	274	generally accepted accounting principles.
275	275	(g) Any taxpayer intending to claim a deduction under this section
276	276	shall file a statement with the secretary of revenue on or before July 1,
277	277	2026, specifying the total amount of the deduction that the taxpayer
278	278	claims. The statement shall be made on such form and in such manner as
279	279	prescribed by the secretary and shall contain such information or
280	280	calculations as the secretary may specify. No deduction shall be allowed
281	281	under this section for any taxable year except to the extent claimed in the
282	282	manner prescribed on or before July 1, 2026. This paragraph does not
283	283	limit the authority of the secretary under K.S.A. 79-3226, and amendments
284	284	thereto, to review or redetermine the proper amount of any deduction
285	285	claimed, whether on the statement required under this subsection or on a
286	286	tax return for any taxable year.
287	287	Sec. 3. K.S.A. 79-3279 is hereby amended to read as follows: 79-
288	288	3279. (a) All business income of railroads and interstate motor carriers of
289	289	persons or property for-hire shall be apportioned to this state by
290	290	multiplying the business income by a fraction, in the case of railroads, the
291	291	numerator of which is the freight car miles in this state and the
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335	335	denominator of which is the freight car miles everywhere, and, in the case
336	336	of interstate motor carriers, the numerator of which is the total number of
337	337	miles operated in this state and the denominator of which is the total
338	338	number of miles operated everywhere.
339	339	(b) For the tax years ending before January 1, 2026, all business
340	340	income of any other taxpayer shall be apportioned to this state by one of
341	341	the following methods:
342	342	(1) By multiplying the business income by a fraction, the numerator
343	343	of which is the property factor plus the payroll factor plus the sales factor,
344	344	and the denominator of which is three; or
345	345	(2) at the election of a qualifying the taxpayer, by multiplying the
346	346	business income by a fraction, the numerator of which is the property
347	347	factor plus the sales factor, and the denominator of which is two.
348	348	(A) For purposes of this subsection (b)(2), a qualifying taxpayer is
349	349	any taxpayer whose payroll factor for a taxable year exceeds 200% of the
350	350	average of the property factor and the sales factor. Whenever two or more
351	351	corporations are engaged in a unitary business and required to file a
352	352	combined report, the fraction comparison provided by this subsection (b)
353	353	(2) shall be calculated by using the payroll factor, property factor and sales
354	354	factor of the combined group of unitary corporations.
355	355	(B) An election under this subsection (b)(2) shall be made by
356	356	including a statement with the original tax return indicating that the
357	357	taxpayer elects to apply the apportionment method under this subsection
358	358	(b)(2). The election shall be effective and irrevocable for the taxable year
359	359	of the election and the following nine taxable years. The election shall be
360	360	binding on all members of a unitary group of corporations.
361	361	Notwithstanding the above, the secretary of revenue may upon the request
362	362	of the taxpayer, grant permission to terminate the election under this
363	363	subsection (b)(2) prior to expiration of the ten-year period.
364	364	(3) At the election of a qualifying telecommunications company, by
365	365	multiplying the business income by a fraction, the numerator of which is
366	366	the information carrying capacity of wire and fiber optic cable available
367	367	for use in this state, and the denominator of which is the information
368	368	carrying capacity of wire and fiber optic cable available for use
369	369	everywhere during the tax year.
370	370	(A) For purposes of this subsection (b)(3), a qualifying
371	371	telecommunications company is a telecommunications company that is a
372	372	qualifying taxpayer under paragraph (A) of subsection (b)(2).
373	373	(B) A qualifying telecommunications company shall make the
374	374	election under this subsection (b)(3) in the same manner as provided under
375	375	paragraph (B) of subsection (b)(2).
376	376	(4) At the election of a distressed area taxpayer, by multiplying the
377	377	business income by the sales factor. The election shall be made by
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421	421	including a statement with the original tax return indicating that the
422	422	taxpayer elects to apply this apportionment method. The election may be
423	423	made only once, it must be made on or before December 31, 1999 and it
424	424	shall be effective for the taxable year of the election and the following nine
425	425	taxable years for so long as the taxpayer maintains the payroll amount
426	426	prescribed by subsection (j) of K.S.A. 79-3271(j), and amendments
427	427	thereto.
428	428	(5) At the election of the taxpayer made at the time of filing of the
429	429	original return, the qualifying business income of any investment funds
430	430	service corporation organized as a corporation or S corporation which
431	431	maintains its primary headquarters and operations or is a branch facility
432	432	that employs at least 100 individuals on a full-time equivalent basis in this
433	433	state and has any investment company fund shareholders residenced in this
434	434	state shall be apportioned to this state as provided in this subsection, as
435	435	follows:
436	436	(A) By multiplying the investment funds service corporation's
437	437	qualifying business income from administration, distribution and
438	438	management services provided to each investment company by a fraction,
439	439	the numerator of which shall be the average of the number of shares
440	440	owned by the investment company's fund shareholders residenced in this
441	441	state at the beginning of and at the end of the investment company's
442	442	taxable year that ends with or within the investment funds service
443	443	corporation's taxable year, and the denominator of which shall be the
444	444	average of the number of shares owned by the investment company's fund
445	445	shareholders everywhere at the beginning of and at the end of the
446	446	investment company's taxable year that ends with or within the investment
447	447	funds service corporation's taxable year.
448	448	(B) A separate computation shall be made to determine the qualifying
449	449	business income from each fund of each investment company. The
450	450	qualifying business income from each investment company shall be
451	451	multiplied by the fraction calculated pursuant to paragraph (A) for each
452	452	fund of such investment company.
453	453	(C) The qualifying portion of total business income of an investment
454	454	funds service corporation shall be determined by multiplying such total
455	455	business income by a fraction, the numerator of which is the gross receipts
456	456	from the provision of management, distribution and administration
457	457	services to or on behalf of an investment company, and the denominator of
458	458	which is the gross receipts of the investment funds service company. To
459	459	the extent an investment funds service corporation has business income
460	460	that is not qualifying business income, such business income shall be
461	461	apportioned to this state pursuant to subsection (b)(1).
462	462	(D) For tax year 2002, the tax liability of an investment funds service
463	463	corporation that has elected to apportion its business income pursuant to
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507	507	paragraph (5) shall be increased by an amount equal to 50% of the
508	508	difference of the amount of such tax liability if determined pursuant to
509	509	subsection (b)(1) less the amount of such tax liability determined with
510	510	regard to paragraph (5).
511	511	(E) When an investment funds service corporation is part of a unitary
512	512	group, the business income of the unitary group attributable to the
513	513	investment funds service corporation shall be determined by multiplying
514	514	the business income of the unitary group by a fraction, the numerator of
515	515	which is the property factor plus the payroll factor plus the sales factor,
516	516	and the denominator of which is three. The property factor is a fraction,
517	517	the numerator of which is the average value of the investment funds
518	518	service corporation's real and tangible personal property owned or rented
519	519	and used during the tax period and the denominator of which is the
520	520	average value of the unitary group's real and tangible personal property
521	521	owned or rented and used during the tax period. The payroll factor is a
522	522	fraction, the numerator of which is the total amount paid during the tax
523	523	period by the investment funds service corporation for compensation, and
524	524	the denominator of which is the total compensation paid by the unitary
525	525	group during the tax period. The sales factor is a fraction, the numerator of
526	526	which is the total sales of the investment funds service corporation during
527	527	the tax period, and the denominator of which is the total sales of the
528	528	unitary group during the tax period.
529	529	(F) A taxpayer seeking to make the election available pursuant to
530	530	subsection (b)(5) of K.S.A. 79-3279(b)(5), and amendments thereto, shall
531	531	only be eligible to continue to make such election if the taxpayer maintains
532	532	at least 95% of the Kansas employees in existence at the time the taxpayer
533	533	first makes such an election.
534	534	(6) At the election of a qualifying taxpayer, by multiplying such
535	535	taxpayer's business income by the sales factor. The election shall be made
536	536	by including a statement with the original tax return indicating that the
537	537	taxpayer elects to apply this apportionment method. The election may be
538	538	made only once and must be made on or before the last day of the taxable
539	539	year during which the investment described in paragraph (A) is placed in
540	540	service, but not later than December 31, 2009, and it shall be effective for
541	541	the taxable year of the election and the following nine taxable years or for
542	542	so long as the taxpayer maintains the wage requirements set forth in
543	543	paragraph (A). If the qualifying taxpayer is a member of a unitary group of
544	544	corporations, all other members of the unitary group doing business within
545	545	this state shall apportion their business income to this state pursuant to
546	546	subsection (b)(1).
547	547	(A) For purposes of this subsection, a qualifying taxpayer is any
548	548	taxpayer making an investment of $100,000,000 for construction in
549	549	Kansas of a new business facility identified under the North American
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593	593	industry classification system (NAICS) subsectors of 31-33, as assigned
594	594	by the secretary of the department of labor, employing 100 or more new
595	595	employees at such facility after July 1, 2007, and prior to December 31,
596	596	2009, and meeting the following requirements for paying such employees
597	597	higher-than-average wages within the wage region for such facility:
598	598	(i) The taxpayer's new Kansas business facility with 500 or fewer
599	599	full-time equivalent employees will provide an average wage that is above
600	600	the average wage paid by all Kansas business facilities that share the same
601	601	assigned NAICS category used to develop wage thresholds and that have
602	602	reported 500 or fewer employees to the Kansas department of labor on the
603	603	quarterly wage reports;
604	604	(ii) the taxpayer's new Kansas business facility with 500 or fewer
605	605	full-time equivalent employees is the sole facility within its assigned
606	606	NAICS category that has reported wages for 500 or fewer employees to
607	607	the Kansas department of labor on the quarterly wage reports;
608	608	(iii) the taxpayer's new Kansas business facility with more than 500
609	609	full-time equivalent employees will provide an average wage that is above
610	610	the average wage paid by all Kansas business facilities that share the same
611	611	assigned NAICS category used to develop wage thresholds and that have
612	612	reported more than 500 employees to the Kansas department of labor on
613	613	the quarterly wage reports;
614	614	(iv) the taxpayer's new Kansas business facility with more than 500
615	615	full-time equivalent employees is the sole facility within its assigned
616	616	NAICS category that has reported wages for more than 500 employees to
617	617	the Kansas department of labor on the quarterly wage reports, in which
618	618	event it shall either provide an average wage that is above the average
619	619	wage paid by all Kansas business facilities that share the same assigned
620	620	NAICS category and that have reported wages for 500 or fewer employees
621	621	to the Kansas department of labor on the quarterly wage reports, or be the
622	622	sole Kansas business facility within its assigned NAICS category that has
623	623	reported wages to the Kansas department of labor on the quarterly wage
624	624	reports;
625	625	(v) the number of NAICS digits to use in developing each set of wage
626	626	thresholds for comparison purposes shall be determined by the secretary of
627	627	commerce;
628	628	(vi) the composition of wage regions used in connection with each set
629	629	of wage thresholds shall be determined by the secretary of commerce; and
630	630	(vii) alternatively, a taxpayer may wage-qualify its new Kansas
631	631	business facility if, after excluding the headcount and wages reported on
632	632	the quarterly wage reports to the Kansas department of labor for
633	633	employees at that new Kansas business facility who own five percent or
634	634	more equity in the taxpayer, the average wage calculated for the taxpayer's
635	635	new Kansas business facility is greater than or equal to 1.5 times the
636	636	1
637	637	2
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675	675	40
676	676	41
677	677	42
678	678	43 HB 2798 9
679	679	aggregate state-wide average wage paid by industries covered by the
680	680	employment security law based on data maintained by the secretary of
681	681	labor.
682	682	(B) For the purposes of the wage requirements in paragraph (A), the
683	683	number of full-time equivalent employees shall be determined by dividing
684	684	the number of hours worked by part-time employees during the pertinent
685	685	measurement interval by an amount equal to the corresponding multiple of
686	686	a 40-hour work week and adding the quotient to the average number of
687	687	full-time employees.
688	688	(C) When the qualifying taxpayer is part of a unitary group, the
689	689	business income of the unitary group attributable to the qualifying
690	690	taxpayer shall be determined by multiplying the business income of the
691	691	unitary group by a fraction, the numerator of which is the property factor
692	692	plus the payroll factor plus the sales factor, and the denominator of which
693	693	is three. The property factor is a fraction, the numerator of which is the
694	694	average value of the qualifying taxpayer's real and tangible personal
695	695	property owned or rented and used during the tax period and the
696	696	denominator of which is the average value of the unitary group's real and
697	697	tangible personal property owned or rented and used during the tax period.
698	698	The payroll factor is a fraction, the numerator of which is the total amount
699	699	paid during the tax period by the qualifying taxpayer for compensation,
700	700	and the denominator of which is the total compensation paid by the unitary
701	701	group during the tax period. The sales factor is a fraction, the numerator of
702	702	which is the total sales of the qualifying taxpayer during the tax period,
703	703	and the denominator of which is the total sales of the unitary group during
704	704	the tax period.
705	705	(D) For purposes of this subsection, the secretary of revenue, upon a
706	706	showing of good cause and after receiving a certification by the secretary
707	707	of commerce of substantial compliance with provisions of this subsection
708	708	(b)(6), may extend any required performance date provided in this
709	709	subsection (b)(6) for a period not to exceed six months.
710	710	(c) For tax years commencing December 31, 2023, and ending before
711	711	January 1, 2026, at the election of the taxpayer, all business income of any
712	712	other taxpayer may be apportioned to this state by multiplying such
713	713	taxpayer's business income by the sales factor. An election under this
714	714	subsection shall be made by including a statement with the original tax
715	715	return for which the election is made indicating that the taxpayer elects to
716	716	apply this apportionment method. The election shall be effective and
717	717	irrevocable for the taxable year of the election.
718	718	(d) For tax years commencing December 31, 2025, all business
719	719	income shall be apportioned to this state by multiplying the business
720	720	income by the sales factor.
721	721	(e) Any taxpayer having previously made an election pursuant to
722	722	1
723	723	2
724	724	3
725	725	4
726	726	5
727	727	6
728	728	7
729	729	8
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760	760	39
761	761	40
762	762	41
763	763	42
764	764	43 HB 2798 10
765	765	subsection (b)(2) shall be permitted to make a new election pursuant to
766	766	subsection (c).
767	767	(f) (1) There shall be allowed as a deduction an amount computed in
768	768	accordance with this subsection.
769	769	(2) As of July 1, 2024, only publicly traded companies, including
770	770	affiliated corporations participating in the filing of a publicly traded
771	771	company's financial statements prepared in accordance with generally
772	772	accepted accounting principles, shall be eligible for this deduction.
773	773	(3) If the provisions of this section result in an aggregate increase in
774	774	the taxpayer's net deferred tax liability or an aggregate decrease in the
775	775	taxpayer's net deferred tax asset, or an aggregate change from a net
776	776	deferred tax asset to a net deferred tax liability, the taxpayer shall be
777	777	entitled to a deduction, as determined in this subsection.
778	778	(4) A taxpayer shall be entitled to a deferred tax impact deduction
779	779	from the taxpayer's entire net income equal to the amount necessary to
780	780	offset the increase in the net deferred tax liability or decrease in the net
781	781	deferred tax asset, or aggregate change from a net deferred tax asset to a
782	782	net deferred tax liability. Such increase in the net deferred tax liability,
783	783	decrease in the net deferred tax asset or the aggregate change from a net
784	784	deferred tax asset to a net deferred tax liability shall be computed based
785	785	on the change that would result from the imposition of the single sales
786	786	factor requirements pursuant to this section, excluding the deduction
787	787	provided under this paragraph, as of the end of the tax year prior to the
788	788	year in which the taxpayer makes an election or is required to apportion
789	789	by the sales factor. The amount of the deduction shall equal the annual
790	790	deferred tax deduction amount set forth in paragraph (5).
791	791	(5) The annual deferred tax deduction amount shall be calculated as
792	792	follows:
793	793	(A) The deferred tax impact determined in paragraph (4) shall be
794	794	divided by the income tax rate for corporations in effect for the tax year
795	795	pursuant to K.S.A. 79-32,110, and amendments thereto;
796	796	(B) the resulting amount shall be further divided by the Kansas
797	797	apportionment factor that was used by the taxpayer in the calculation of
798	798	the deferred tax assets and deferred tax liabilities as provided in this
799	799	subsection; and
800	800	(C) the result multiplied by
801	801	1
802	802	/10 shall represent the total net deferred
803	803	tax deduction available for the 2027 tax year and the next nine successive
804	804	tax years.
805	805	(6) The deduction calculated under paragraph (5) shall not be
806	806	adjusted as a result of any events subsequent to such calculation,
807	807	including, but not limited to, any disposition or abandonment of assets.
808	808	Such deduction shall be calculated without regard to any tax liabilities
809	809	under the federal internal revenue code and shall not alter the tax basis of
810	810	1
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852	852	43 HB 2798 11
853	853	any asset. If the deduction under this section is greater than the taxpayer's
854	854	Kansas adjusted gross income, any excess deduction shall be carried
855	855	forward and applied as a deduction for future tax years until fully utilized.
856	856	(7) At the discretion of the taxpayer, the taxpayer may be allowed to
857	857	claim other available tax credits before claiming the deferred tax
858	858	deduction calculated under this section. Any taxpayer intending to claim a
859	859	deduction under this subsection shall file a statement with the secretary on
860	860	or before July 1 of the year after the first tax year for which a single sales
861	861	factor is required. Such statement shall specify the total amount of the
862	862	deduction that the taxpayer claims on such form and in such manner as
863	863	prescribed by the secretary. No deduction shall be allowed under this
864	864	paragraph for any tax year unless claimed on such timely filed statement
865	865	in accordance with this paragraph.
866	866	(8) For purposes of this subsection:
867	867	(A) "Net deferred tax liability" means deferred tax liabilities that
868	868	exceed the deferred tax assets of the taxpayer, as computed in accordance
869	869	with generally accepted accounting principles.
870	870	(B) "Net deferred tax asset" means that deferred tax assets exceed the
871	871	deferred tax liabilities of the taxpayer, as computed in accordance with
872	872	generally accepted accounting principles.
873	873	(g) The amendments made to this section by this act shall apply
874	874	commencing on and after December 31, 2023.
875	875	Sec. 4. K.S.A. 2023 Supp. 79-32,110 is hereby amended to read as
876	876	follows: 79-32,110. (a) Resident Individuals. Except as otherwise provided
877	877	by K.S.A. 79-3220(a), and amendments thereto, a tax is hereby imposed
878	878	upon the Kansas taxable income of every resident individual, which tax
879	879	shall be computed in accordance with the following tax schedules:
880	880	(1) Married individuals filing joint returns.
881	881	(A) For tax year 2012:
882	882	If the taxable income is: The tax is:
883	883	Not over $30,000 ......................................3.5% of Kansas taxable income
884	884	Over $30,000 but not over $60,000 ..........$1,050 plus 6.25% of excess
885	885	over $30,000
886	886	Over $60,000 .............................................$2,925 plus 6.45% of excess
887	887	over $60,000
888	888	(B) For tax year 2013:
889	889	If the taxable income is: The tax is:
890	890	Not over $30,000 ......................................3.0% of Kansas taxable income
891	891	Over $30,000 .............................................$900 plus 4.9% of excess over
892	892	$30,000
893	893	(C) For tax year 2014:
894	894	If the taxable income is: The tax is:
895	895	Not over $30,000 ......................................2.7% of Kansas taxable income
896	896	1
897	897	2
898	898	3
899	899	4
900	900	5
901	901	6
902	902	7
903	903	8
904	904	9
905	905	10
906	906	11
907	907	12
908	908	13
909	909	14
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911	911	16
912	912	17
913	913	18
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915	915	20
916	916	21
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925	925	30
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932	932	37
933	933	38
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935	935	40
936	936	41
937	937	42
938	938	43 HB 2798 12
939	939	Over $30,000 .............................................$810 plus 4.8% of excess over
940	940	$30,000
941	941	(D) For tax years 2015 and 2016:
942	942	If the taxable income is: The tax is:
943	943	Not over $30,000 ......................................2.7% of Kansas taxable income
944	944	Over $30,000 .............................................$810 plus 4.6% of excess over
945	945	$30,000
946	946	(E) For tax year 2017:
947	947	If the taxable income is: The tax is:
948	948	Not over $30,000 ......................................2.9% of Kansas taxable income
949	949	Over $30,000 but not over $60,000 ..........$870 plus 4.9% of excess over
950	950	$30,000
951	951	Over $60,000 .............................................$2,340 plus 5.2% of excess over
952	952	$60,000
953	953	(F) For tax year 2018, and all tax years thereafter:
954	954	If the taxable income is: The tax is:
955	955	Not over $30,000......................................3.1% of Kansas taxable income
956	956	Over $30,000 but not over $60,000..........$930 plus 5.25% of excess
957	957	over $30,000
958	958	Over $60,000.............................................$2,505 plus 5.7% of excess
959	959	over $60,000
960	960	(2) All other individuals.
961	961	(A) For tax year 2012:
962	962	If the taxable income is: The tax is:
963	963	Not over $15,000 ......................................3.5% of Kansas taxable income
964	964	Over $15,000 but not over $30,000 ..........$525 plus 6.25% of excess
965	965	over $15,000
966	966	Over $30,000 .............................................$1,462.50 plus 6.45% of excess
967	967	over $30,000
968	968	(B) For tax year 2013:
969	969	If the taxable income is: The tax is:
970	970	Not over $15,000 ......................................3.0% of Kansas taxable income
971	971	Over $15,000 .............................................$450 plus 4.9% of excess over
972	972	$15,000
973	973	(C) For tax year 2014:
974	974	If the taxable income is: The tax is:
975	975	Not over $15,000 ......................................2.7% of Kansas taxable income
976	976	Over $15,000 .............................................$405 plus 4.8% of excess over
977	977	$15,000
978	978	(D) For tax years 2015 and 2016:
979	979	If the taxable income is: The tax is:
980	980	Not over $15,000 ......................................2.7% of Kansas taxable income
981	981	Over $15,000 .............................................$405 plus 4.6% of excess over
982	982	1
983	983	2
984	984	3
985	985	4
986	986	5
987	987	6
988	988	7
989	989	8
990	990	9
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1001	1001	20
1002	1002	21
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1007	1007	26
1008	1008	27
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1011	1011	30
1012	1012	31
1013	1013	32
1014	1014	33
1015	1015	34
1016	1016	35
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1020	1020	39
1021	1021	40
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1024	1024	43 HB 2798 13
1025	1025	$15,000
1026	1026	(E) For tax year 2017:
1027	1027	If the taxable income is: The tax is:
1028	1028	Not over $15,000 ......................................2.9% of Kansas taxable income
1029	1029	Over $15,000 but not over $30,000 ..........$435 plus 4.9% of excess over
1030	1030	$15,000
1031	1031	Over $30,000 .............................................$1,170 plus 5.2% of excess over
1032	1032	$30,000
1033	1033	(F) For tax year 2018, and all tax years thereafter:
1034	1034	If the taxable income is: The tax is:
1035	1035	Not over $15,000......................................3.1% of Kansas taxable income
1036	1036	Over $15,000 but not over $30,000..........$465 plus 5.25% of excess
1037	1037	over $15,000
1038	1038	Over $30,000.............................................$1,252.50 plus 5.7% of excess
1039	1039	over $30,000
1040	1040	(b) Nonresident Individuals. A tax is hereby imposed upon the Kansas
1041	1041	taxable income of every nonresident individual, which tax shall be an
1042	1042	amount equal to the tax computed under subsection (a) as if the
1043	1043	nonresident were a resident multiplied by the ratio of modified Kansas
1044	1044	source income to Kansas adjusted gross income.
1045	1045	(c) Corporations. A tax is hereby imposed upon the Kansas taxable
1046	1046	income of every corporation doing business within this state or deriving
1047	1047	income from sources within this state. Such tax shall consist of a normal
1048	1048	tax and a surtax and shall be computed as follows unless otherwise
1049	1049	modified pursuant to K.S.A. 2022 2023 Supp. 74-50,321 and section 1,
1050	1050	and amendments thereto:
1051	1051	(1) The normal tax shall be in an amount equal to 4% of the Kansas
1052	1052	taxable income of such corporation; and
1053	1053	(2) The surtax shall be in an amount equal to 3% of the Kansas
1054	1054	taxable income of such corporation in excess of $50,000.
1055	1055	(d) Fiduciaries. A tax is hereby imposed upon the Kansas taxable
1056	1056	income of estates and trusts at the rates provided in subsection (a)(2)
1057	1057	hereof.
1058	1058	(e) Notwithstanding the provisions of subsections (a) and (b): (1) For
1059	1059	tax years 2016 and 2017, married individuals filing joint returns with
1060	1060	taxable income of $12,500 or less, and all other individuals with taxable
1061	1061	income of $5,000 or less, shall have a tax liability of zero; and (2) for tax
1062	1062	year 2018, and all tax years thereafter, married individuals filing joint
1063	1063	returns with taxable income of $5,000 or less, and all other individuals
1064	1064	with taxable income of $2,500 or less, shall have a tax liability of zero.
1065	1065	(f) No taxpayer shall be assessed penalties and interest arising from
1066	1066	the underpayment of taxes due to changes to the rates in subsection (a) that
1067	1067	became law on July 1, 2017, so long as such underpayment is rectified on
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1098	1098	31
1099	1099	32
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1101	1101	34
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1103	1103	36
1104	1104	37
1105	1105	38
1106	1106	39
1107	1107	40
1108	1108	41
1109	1109	42
1110	1110	43 HB 2798 14
1111	1111	or before April 17, 2018.
1112	1112	Sec. 5. K.S.A. 79-1129 and 79-3279 and K.S.A. 2023 Supp. 79-
1113	1113	32,110 are hereby repealed.
1114	1114	Sec. 6. This act shall take effect and be in force from and after its
1115	1115	publication in the statute book.
1116	1116	1
1117	1117	2
1118	1118	3
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1120	1120	5