Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor
Division of the Budget
February 6, 2023
The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
300 SW 10th Avenue, Room 548-S
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 81 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 81 is
respectfully submitted to your committee.
Calculations for Kansas income taxes are based on Kansas adjusted gross income, which
is calculated by adding or subtracting certain types of income from the federal adjusted gross
income. SB 81 would allow the amount of disallowed federal Work Opportunity Tax Credits to
be subtracted from income for Kansas income tax purposes. Additionally, the amount of
disallowed federal Employee Retention Credits could be subtracted from income for Kansas
income tax purposes beginning in tax year 2020. The subtraction modifications for the Work
Opportunity Tax Credit and the Employee Retention Credit disallowances would be limited to
25.0 percent of the amount of disallowances.
Estimated State Fiscal Effect
FY 2023
SGF
FY 2023
All Funds
FY 2024
SGF
FY 2024
All Funds
Revenue -- -- ($7,000,000) ($7,000,000
Expenditure -- -- -- --
FTE Pos. -- -- -- --
The Department of Revenue estimates that SB 81 would decrease State General Fund
revenues by $7.0 million in FY 2024, $2.5 million in FY 2025, and $1,125,000 in FY 2026. To
formulate these estimates, the Department of Revenue reviewed data on the Work Opportunity
Tax Credit and the Employee Retention Credit from the Congressional Budget Office and the The Honorable Caryn Tyson, Chairperson
Page 2—SB 81
federal Joint Committee on Taxation. The federal impact of the Employee Retention Credit is
estimated to be $85.0 billion and assuming Kansas represents approximately 1.0 percent of the
federal impact, the Kansas employers are estimated to claim $850.0 million in federal Employee
Retention Credits. Because the bill limits the subtraction modification to 25.0 percent of the
disallowance, only $212.5 million of the disallowances could be claimed. Using an average tax
rate of 5.0 percent, the impact to Kansas tax liability would be a reduction of $10,625,000 that
would be spread over three fiscal years. The Department indicates that the bill would have no
fiscal effect on its operations. Any fiscal effect associated with SB 81 is not reflected in The FY
2024 Governor’s Budget Report.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue