HOUSE BILL No. 2289
AN ACT concerning taxation; relating to the Kansas affordable housing tax credit act;
discontinuing such credit for qualified developments receiving a 4% federal tax
credit; limiting the aggregate amount of such credit and discontinuing such credit
after qualified allocation plan year 2028; relating to the Kansas housing investor tax
credit; providing for transferability of credits from the year that the credit was
originally issued; amending K.S.A. 2024 Supp. 79-32,306 and 79-32,313 and
repealing the existing sections.
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, 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 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 HOUSE BILL No. 2289—page 2
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.
(i) (1) Notwithstanding the foregoing provisions, the maximum
amount of Kansas affordable housing tax credits awarded by the
KHRC to all qualified developments for qualified allocation plan year
2025 shall not exceed $25,000,000. Commencing with the qualified
allocation plan adopted for 2026 and ending with the qualified
allocation plan adopted for 2028, the maximum amount of Kansas
affordable housing tax credits awarded by the KHRC to all qualified
developments in each qualified allocation plan year shall not exceed
$8,800,000. On and after November 15, 2025, the KHRC shall not
accept any application for, or award any additional allocation of,
credit under this act to a qualified development receiving a 4% federal
tax credit, which is defined as a qualified development financed by tax-
exempt bonds as provided under section 42(h)(4) of the federal internal
revenue code. The KHRC shall continue to award credit under this act
to qualified developments receiving 9% federal tax credits in
accordance with the provisions of this act for the 2026, 2027 and 2028
qualified allocation plans. A qualified development receiving a 4%
federal tax credit awarded a credit allocation under this act by the
KHRC on or before November 14, 2025, pursuant to the 2025 qualified
allocation plan or any previous qualified allocation plan, shall
continue to receive the awarded credit throughout the authorized credit
period and any applicable carry forward period.
(2) Subsequent to awards for the 2028 qualified allocation plan,
the KHRC shall not accept any application for, or award any
additional allocation of, credit under this act in any amount to a
qualified development. No credits under this act shall be allocated or
awarded after the 2028 qualified allocation plan or after December 31,
2028. A qualified development receiving a 9% federal tax credit
awarded a credit allocation under this act by the KHRC pursuant to the
2028 qualified allocation plan or any previous qualified allocation
plan shall continue to receive the awarded credit throughout the
authorized credit period and any applicable carry forward period.
Sec. 2. K.S.A. 2024 Supp. 79-32,313 is hereby amended to read as
follows: 79-32,313. (a) (1) For tax year 2022 and all tax years
thereafter, 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, shall be allowed to:
(A) A qualified investor for a cash investment in a qualified
housing project that has been approved and issued a tax credit by the
director. The tax credit may be claimed in its entirety in the taxable
year the cash investment is made; and
(B) a project builder or developer of a qualified housing project HOUSE BILL No. 2289—page 3
that has been approved and issued a tax credit by the director.
(2) To claim such tax credit, the qualified investor, project builder
or developer or transferee shall provide all information or
documentation in the form and manner required by the secretary of
revenue. If the amount of the credit exceeds the taxpayer's tax liability
in any one taxable year, the remaining portion of the credit may be
carried forward in the succeeding taxable years until the total amount of
the credit is used, except that no credit may be claimed after four
taxable years next succeeding the taxable year that such credit was
issued, and any remaining credit shall be forfeited. Any portion of the
credit that is carried forward may be transferred pursuant to subsection
(d) and claimed by the transferee in the same manner as the transferor.
(b) (1) Tax credits may be issued by the director for a qualified
housing project as follows:
(A) For qualified housing projects located in a county with a
population of not more than 8,000, in an amount of not to exceed
$35,000 per residential unit;
(B) for qualified housing projects located in a county with a
population of more than 8,000 but not more than 25,000, in an amount
of not to exceed $32,000 per residential unit; and
(C) for all other qualified housing projects, in an amount of not to
exceed $30,000.
(2) A qualified housing project shall be limited to a total of 40
such residential units per year for both single-family and multi-family
dwellings.
(3) Tax credits may be issued to a qualified investor in the amount
of a cash investment of up to the total amount that may be issued by the
director under this subsection for the qualified housing project, or as
provided in the agreement required by K.S.A. 2024 Supp. 79-32,312,
and amendments thereto. Project builders or developers may apply to
the director each year for tax credits for additional units or phases of a
project. Qualified investors may be issued tax credits for cash
investments in multiple qualified housing projects. Project builders or
developers may apply and be approved for multiple qualified housing
projects in the same tax year.
(4) The aggregate amount of tax credits that may be issued under
this section shall not exceed $13,000,000 each tax year, except that if
the director issues an aggregate amount of tax credits in one tax year
that is less than $13,000,000, then the director may carry forward the
difference and issue such amount of tax credits in the immediately
succeeding tax year in addition to the statutory amount that may be
issued under this section. Of the aggregate amount of tax credits issued
in one tax year, the director shall allocate:
(A) Not less than $2,500,000 in tax credits for qualified housing
projects located in counties with a population of not more than 8,000;
(B) not less than $2,500,000 in tax credits for qualified housing
projects located in counties with a population of more than 8,000 but
not more than 25,000; and
(C) up to $8,000,000 in tax credits for qualified housing projects
located in counties with a population of more than 25,000 but not more
than 75,000.
(c) A cash investment in a qualified housing project shall be
deemed to have been made on the date of acquisition of the qualified
security, as such date is determined by the director.
(d) Any qualified investor who receives a tax credit pursuant to
this section shall be deemed to acquire an interest in the nature of a
transferable credit limited to the amount of the credit issued to the
qualified investor by the director. All or a portion of such credit may be
transferred by the qualified investor or any subsequent transferee to one
or more persons, whether or not such transferee is then a qualified
investor, and be claimed by the transferee as a credit against the
transferee's Kansas tax liability in the same manner as the transferor
beginning in the year the credit is transferred provided in subsection (a)
beginning in the year the cash investment was originally made by the HOUSE BILL No. 2289—page 4
qualified investor. The credit may be carried forward as permitted by
subsection (a). There shall be no limit on the number of times a credit
or any portion thereof can be transferred. No person shall be entitled to
a refund for any interest on such tax credit that may be created under
this section. A credit acquired by transfer shall be subject to the
limitations prescribed in this section. Any such transferee succeeds to
all remaining rights and restrictions of the transferor with respect to the
credit being transferred on the date of such transfer. Documentation of
any credit acquired by transfer shall be provided by the taxpayer
claiming such credit in the manner required by the secretary of revenue.
The qualified investor or subsequent transferee transferring such credit
shall provide the director and the secretary of revenue with the name,
address and taxpayer identification number of each person to whom
credits have been transferred and such other information as may be
required by the director or the secretary of revenue. The provisions of
this subsection shall apply to credits issued for tax year 2022 and all tax
years thereafter.
(e) The secretary of revenue may adopt rules and regulations as
necessary to implement and administer the provisions of this act.
(f) For purposes of calculating any tax due under K.S.A. 40-253,
and amendments thereto, the credit allowed by this section shall be
treated as a tax paid under K.S.A. 40-252, and amendments thereto.
(g) The provisions of subsection (d), as amended by this act, shall
apply retroactively to any credits issued for tax year 2022 and all tax
years thereafter.
Sec. 3. K.S.A. 2024 Supp. 79-32,306 and 79-32,313 are hereby
repealed.
Sec. 4. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the HOUSE, and was
adopted by that body
HOUSE adopted
Conference Committee Report
Speaker of the House.
Chief Clerk of the House.
Passed the SENATE
as amended
SENATE adopted
Conference Committee Report
President of the Senate.
Secretary of the Senate.
APPROVED
Governor. HOUSE BILL No. 2289—page 5