Session of 2025
HOUSE BILL No. 2119
By Committee on Commerce, Labor and Economic Development
Requested by Representative Tarwater
1-28
AN ACT concerning taxation; relating to the Kansas affordable housing
tax credit act; discontinuing such credit effective July 1, 2025;
amending K.S.A. 2024 Supp. 79-32,306 and repealing the existing
section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 2024 Supp. 79-32,306 is hereby amended to read as
follows: 79-32,306. (a) For all taxable years commencing after December
31, 2022, and ending on December 31, 2025, except as provided in
subsection (i), there shall be allowed a credit against the income tax
liability imposed pursuant to the Kansas income tax act, the privilege tax
liability imposed upon any national banking association, state bank, trust
company or savings and loan association pursuant to article 11 of chapter
79 of the Kansas Statutes Annotated, and amendments thereto, or the
premium tax liability imposed upon an insurance company pursuant to
K.S.A. 40-252, and amendments thereto, for each qualified development
for each year of the credit period, in an amount equal to the federal tax
credit allocated or allowed by the KHRC to such qualified development,
except that there shall be no reduction in the credit allowable in the first
year of the credit period due to the calculation in section 42(f)(2) of the
federal internal revenue code.
(b) The KHRC shall issue an allocation certificate to an owner of a
qualified development to which a credit has been allocated. The KHRC
shall issue an allocation certificate to the qualified development
simultaneously with issuance of federal form 8609 with respect to the
federal tax credits.
(c) All allocations shall be made pursuant to the qualified allocation
plan.
(d) If an owner of a qualified development receiving an allocation of
a credit is a pass-through entity, the owner may allocate the credit among
its partners or members in any manner agreed to by such persons
regardless of whether: (1) Any such person is allocated or allowed any
portion of any federal tax credit with respect to the qualified project; (2)
the allocation of the credit under the terms of the agreement has substantial
economic effect within the meaning of section 704(b) of the federal
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internal revenue code; or (3) any such person is deemed a partner for
federal income tax purposes, if the partner or member would be considered
a partner or member under applicable state law governing such entity and
has been admitted as a partner or member on or prior to the date for filing
the qualified taxpayer's tax return, including any amendments to such tax
return, with respect to the year of the credit. In the case of multiple tiers of
pass-through entities, the credit may be so allocated through any number
of pass-through entities in any manner agreed by the owners of such pass-
through entities, none of which shall be considered a transfer. Any pass-
through entity allocating a credit to its partners or members shall attach a
pass-through certification to its tax return annually. Each partner or
member shall be allowed to claim or further allocate such amount subject
to any restrictions set forth in this act.
(e) An owner of a qualified development to which a credit has been
allocated and each qualified taxpayer to which such owner has allocated a
portion of such credit, if any, shall file with their state income, privilege or
premium tax return a copy of the allocation certificate issued by the
KHRC with respect to such qualified development and a copy of any pass-
through certification, as prescribed by the director.
(f) No credit shall be allocated pursuant to this act unless the qualified
development is the subject of a recorded restrictive covenant requiring the
development to be maintained and operated as a qualified development
and is in accordance with the accessibility and adaptability requirements of
the federal tax credits and title VIII of the civil rights act of 1968, as
amended by the fair housing amendments act of 1988, for a period of 15
taxable years, or such longer period as may be agreed to between the
KHRC and the owner of the qualified development, beginning with the
first taxable year of the credit period.
(g) The allocated credit amount may be taken against the income,
privilege or premium taxes imposed for each taxable year of the credit
period. Any amount of credit that exceeds the income, privilege or
premium tax liability of a qualified taxpayer for a taxable year may be
carried forward as a credit against subsequent years' tax liability up to 11
tax years following the tax year in which the allocation was made and shall
be applied first to the earliest years possible. Any amount of the credit that
is not used shall not be refunded to the taxpayer.
(h) Unless otherwise provided in this act or the context or law
requires otherwise, the KHRC shall determine eligibility for a credit and
allocate credits in accordance with the standards and requirements set forth
in section 42 of the federal internal revenue code. Any combination of
federal tax credits and credits allowed pursuant to this act shall be the least
amount necessary to ensure the financial feasibility of a qualified
development.
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(i) The provisions of the Kansas affordable housing tax credit act,
K.S.A. 2024 Supp. 79-32,304 through 79-32,309, and amendments thereto,
shall be discontinued on July 1, 2025, except that such provisions shall
continue to apply through the credit period, and any applicable carry
forward period, of an affordable housing tax credit allocation awarded to
the owner of a qualified development by the KHRC as provided in
subsection (b) before July 1, 2025. No allocation of a credit shall be
awarded by the KHRC as provided in subsection (b) after June 30, 2025.
Sec. 2. K.S.A. 2024 Supp. 79-32,306 is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.
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