SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE BILL NO. 126
As Amended by Senate Committee on
Assessment and Taxation
Brief*
SB 126, as amended, would create an income tax credit
for certain residential clean energy expenditures and provide
for income tax subtraction modifications associated with
certain net operating losses and federal tax credit
disallowances.
Residential Clean Energy Tax Credit
The bill would create, beginning in tax year 2023, an
individual income tax credit for Kansas resident taxpayers
equal to 100 percent of the amount of federal clean energy
credits related to qualified solar electric, solar water heating,
and small wind energy property expenditures for a dwelling in
Kansas.
The credit would be non-refundable, but any portion of
the credit exceeding the taxpayer’s income tax liability could
be carried forward indefinitely.
Net Operating Loss Subtraction Modification
The bill would create a subtraction modification allowing
taxpayers who carried back federal net operating losses in
tax year 2018 through 2020 pursuant to the federal CARES
Act to subtract such amounts from their income for purposes
of determining Kansas adjusted gross income. Taxpayers
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org would be permitted to carry forward such net operating loss
for up to 20 years if the amount exceeds the Kansas adjusted
gross income of the taxpayer.
The bill would extend the deadline for eligible taxpayers
to file amended returns for tax years 2018 through 2020 until
April 15, 2025.
Federal Tax Credit Disallowance Subtraction
Modifications
The bill would enact subtraction modifications in
determining Kansas adjusted gross income equal to 25.0
percent of the amount of federal disallowance related to the
Work Opportunity Tax Credit and similar credits under section
280C of the federal Internal Revenue Code and, effective for
tax year 2020 and all years thereafter, 25.0 percent of the
amount of federal disallowance related to the Employee
Retention Tax Credit.
Background
The Senate Committee on Assessment and Taxation
inserted the contents of SB 40 and SB 81 into SB 126 while
retaining the contents of SB 126. Background information for
each bill may be found below.
SB 40 (Net Operating Loss Subtraction Modification)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by representatives of BridgeBuilder Tax and
Legal Services and the National Federation of Independent
2- 126 Businesses. Proponents stated the bill would allow Kansas
taxpayers to benefit from 2020 changes to the federal tax
code.
No other testimony was provided.
SB 81 (Federal Tax Credit Disallowance Subtraction
Modifications)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by a representative of the Kansas Restaurant
and Hospitality Association, generally stating the bill would
allow employers who benefit from federal tax credits to still be
able to deduct otherwise deductible expenses on their state
income taxes.
No other testimony was provided.
SB 126 (Residential Clean Energy Tax Credit)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by a representative of the Kansas Sierra Club,
who stated the bill would spur home solar and wind
installations in Kansas and would be positive for Kansas
economically and environmentally.
3- 126 Written-only proponent testimony was provided by
representatives of the Clean Energy Business Council and
Flint Hills Renewable Energy and Efficiency Cooperative.
Written-only opponent testimony was provided by a
representative of Americans for Prosperity-Kansas.
Fiscal Information
The fiscal information for each bill may be found below.
SB 40 (Net Operating Loss Subtraction Modification)
According to the fiscal note prepared by the Division of
the Budget, the Department of Revenue indicates enactment
of the bill would reduce State General Fund receipts by $8.4
million in FY 2024 and $8.4 million in FY 2025. The bill would
have no fiscal effect after those years. Any fiscal effect
associated with the bill is not reflected in The FY 2024
Governor’s Budget Report.
SB 81 (Federal Tax Credit Disallowance Subtraction
Modifications)
According to the fiscal note prepared by the Division of
the Budget, the Department of Revenue indicates enactment
of the bill would reduce State General Fund receipts by $7.0
million in FY 2024, $2.5 million in FY 2025, and $1.1 million in
FY 2026. Any fiscal effect associated with the bill is not
reflected in The FY 2024 Governor’s Budget Report.
SB 126 (Residential Clean Energy Tax Credit)
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department of
Revenue indicates enactment of the bill would reduce State
General Fund receipts by $40.5 million in FY 2024, $42.5
4- 126 million in FY 2025, and $44.7 million in FY 2026. Any fiscal
effect associated with the bill is not reflected in The FY 2024
Governor’s Budget Report.
Taxation; income tax; credits; modifications; Work Opportunity Tax Credit; Employee
Retention Credit; net operating losses; residential clean energy credit
5- 126