Kansas 2025-2026 Regular Session

Kansas Senate Bill SB25 Compare Versions

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

Old	New	Differences
1	1	Session of 2025
2	2	SENATE BILL No. 25
3	3	By Committee on Assessment and Taxation
4	4	1-16
5	5	AN ACT concerning insurance; relating to property and casualty
6	6	insurance; enacting the insurance savings account act; allowing
7	7	individuals and corporations to establish insurance savings accounts
8	8	with certain financial institutions; providing eligible expenses,
9	9	requirements and restrictions for such accounts; requiring the secretary
10	10	of revenue to adopt certain rules and regulations; granting nonexclusive
11	11	marketing authority to the state commissioner of insurance;
12	12	establishing addition and subtraction modifications under the Kansas
13	13	income tax act; amending K.S.A. 2024 Supp. 79-32,117 and 79-32,138
14	14	and repealing the existing sections.
15	15	Be it enacted by the Legislature of the State of Kansas:
16	16	New Section 1. The provisions of sections 1 through 7, and
17	17	amendments thereto, shall be known and may be cited as the insurance
18	18	savings account act.
19	19	New Sec. 2. As used in this act:
20	20	(a) "Act" means the insurance savings account act.
21	21	(b) "Account" or "insurance savings account" means an individual or
22	22	corporate savings account established in accordance with the provisions of
23	23	this act.
24	24	(c) "Account holder" means an individual or corporation who
25	25	establishes an account that is designated as an insurance savings account
26	26	pursuant to the provisions of section 3, and amendments thereto, with a
27	27	financial institution.
28	28	(d) "Eligible expenses" means:
29	29	(1) Premiums paid to an insurance company, as defined in K.S.A. 40-
30	30	201, and amendments thereto, whether paid directly or through a broker or
31	31	agent, for the types of insurance described in K.S.A. 40-901 or 40-1102,
32	32	and amendments thereto; and
33	33	(2) deductibles paid related to a claim under a contract of insurance of
34	34	the type described in K.S.A. 40-901 or 40-1102, and amendments thereto.
35	35	(e) "Financial institution" means any state or federally chartered
36	36	bank, trust company, savings and loan association or credit union that is:
37	37	(1) Authorized to do business in this state; and
38	38	(2) insured by the federal deposit insurance corporation or the
39	39	national credit union administration.
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76	76	(f) "Secretary" means the secretary of revenue.
77	77	New Sec. 3. (a) On and after January 1, 2026, any individual or
78	78	corporation may open an account with a financial institution and designate
79	79	the account, in its entirety, as an insurance savings account to be used to
80	80	pay or reimburse eligible expenses. An individual or corporation may be
81	81	the account holder of multiple accounts. An individual may jointly own the
82	82	account with another individual if such individuals file a joint income tax
83	83	return. An account holder shall comply with the requirements of this act to
84	84	be eligible for the modifications set forth in K.S.A. 79-32,117 and 79-
85	85	32,138, and amendments thereto.
86	86	(b) In the event of the death of an account holder, the balance of such
87	87	account shall be paid to the payable on death beneficiary in accordance
88	88	with K.S.A. 9-1215, and amendments thereto, or, in the absence of a
89	89	named payable on death beneficiary, in accordance with the provisions of
90	90	the Kansas probate code.
91	91	(c) (1) The maximum contribution to an account in any tax year shall
92	92	be $6,000 for an individual, $12,000 for a married couple filing a joint
93	93	return and $25,000 for a corporation.
94	94	(2) If a limit in paragraph (1) is exceeded, then thereafter all interest
95	95	or other income earned on the investment of moneys in an account in
96	96	excess of the contribution limit shall be subject to the tax imposed by the
97	97	Kansas income tax act.
98	98	(3) Moneys may remain in an account for an unlimited duration
99	99	without the interest or income being subject to recapture or penalty.
100	100	(d) The account holder shall not use moneys in an account to pay
101	101	expenses of administering the account, except that a service fee may be
102	102	deducted from the account by a financial institution. The account holder
103	103	shall be responsible for maintaining documentation for the account and for
104	104	eligible expenses.
105	105	New Sec. 4. (a) The moneys in an insurance savings account may be:
106	106	(1) Used for eligible expenses;
107	107	(2) transferred to another newly created account;
108	108	(3) invested in certificates of deposit opened and designated as
109	109	insurance savings accounts; and
110	110	(4) used to pay service fees assessed by the financial institution.
111	111	(b) Moneys withdrawn from an account shall be subject to recapture
112	112	by the secretary in the tax year in which they were withdrawn if the
113	113	moneys are used for any purpose other than the expenses or transactions
114	114	authorized pursuant to subsection (a).
115	115	(c) Moneys that are subject to recapture shall be an amount equal to
116	116	the moneys withdrawn from an account and shall be added to the Kansas
117	117	adjusted gross income of the account holder pursuant to K.S.A. 79-
118	118	32,117(b) or 79-32,138(b), and amendments thereto.
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162	162	(d) With respect to individuals, if the account holder dies or, if the
163	163	account is jointly owned and the account owners die, and the account does
164	164	not have a surviving payable on death beneficiary, then all of the moneys
165	165	in the account resulting from contributions or income earned from assets in
166	166	the account shall be subject to recapture in the tax year of the death or
167	167	deaths pursuant to K.S.A. 79-32,117, and amendments thereto.
168	168	New Sec. 5. (a) The secretary shall establish forms for an account
169	169	holder to annually report information about any accounts held by such
170	170	account holder. An account holder shall annually file with the account
171	171	holder's state income tax return all forms required by the secretary under
172	172	this section, the form 1099 for the account issued by the financial
173	173	institution and any other supporting documentation the secretary requires.
174	174	(b) Prior to December 1, 2025, the secretary shall adopt rules and
175	175	regulations necessary to administer the provisions of this act.
176	176	New Sec. 6. (a) No financial institution shall be required to:
177	177	(1) Designate an account as an insurance savings account in the
178	178	financial institution's account contracts or systems or in any other way;
179	179	(2) track the use of moneys withdrawn from an account; or
180	180	(3) report any information to the department of revenue or any other
181	181	governmental agency that is not otherwise required by law.
182	182	(b) No financial institution shall be responsible or liable for:
183	183	(1) Determining or ensuring that an account holder is eligible for a
184	184	Kansas adjusted gross income modification pursuant to K.S.A. 79-32,117
185	185	or 79-32,138, and amendments thereto;
186	186	(2) determining or ensuring that moneys in the account are used for
187	187	eligible expenses; or
188	188	(3) reporting or remitting taxes or penalties related to the use of
189	189	account moneys.
190	190	(c) A financial institution may rely on such financial institution's
191	191	account records for determining a payable on death beneficiary for an
192	192	insurance savings account.
193	193	New Sec. 7. The commissioner of insurance may have nonexclusive
194	194	authority to market the insurance savings account program to account
195	195	holders and financial institutions throughout the state and may report on
196	196	the marketing initiatives on the insurance department's website.
197	197	Sec. 8. K.S.A. 2024 Supp. 79-32,117 is hereby amended to read as
198	198	follows: 79-32,117. (a) The Kansas adjusted gross income of an individual
199	199	means such individual's federal adjusted gross income for the taxable year,
200	200	with the modifications specified in this section.
201	201	(b) There shall be added to federal adjusted gross income:
202	202	(i) Interest income less any related expenses directly incurred in the
203	203	purchase of state or political subdivision obligations, to the extent that the
204	204	same is not included in federal adjusted gross income, on obligations of
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248	248	any state or political subdivision thereof, but to the extent that interest
249	249	income on obligations of this state or a political subdivision thereof issued
250	250	prior to January 1, 1988, is specifically exempt from income tax under the
251	251	laws of this state authorizing the issuance of such obligations, it shall be
252	252	excluded from computation of Kansas adjusted gross income whether or
253	253	not included in federal adjusted gross income. Interest income on
254	254	obligations of this state or a political subdivision thereof issued after
255	255	December 31, 1987, shall be excluded from computation of Kansas
256	256	adjusted gross income whether or not included in federal adjusted gross
257	257	income.
258	258	(ii) Taxes on or measured by income or fees or payments in lieu of
259	259	income taxes imposed by this state or any other taxing jurisdiction to the
260	260	extent deductible in determining federal adjusted gross income and not
261	261	credited against federal income tax. This paragraph shall not apply to taxes
262	262	imposed under the provisions of K.S.A. 79-1107 or 79-1108, and
263	263	amendments thereto, for privilege tax year 1995, and all such years
264	264	thereafter.
265	265	(iii) The federal net operating loss deduction, except that the federal
266	266	net operating loss deduction shall not be added to an individual's federal
267	267	adjusted gross income for tax years beginning after December 31, 2016.
268	268	(iv) Federal income tax refunds received by the taxpayer if the
269	269	deduction of the taxes being refunded resulted in a tax benefit for Kansas
270	270	income tax purposes during a prior taxable year. Such refunds shall be
271	271	included in income in the year actually received regardless of the method
272	272	of accounting used by the taxpayer. For purposes hereof, a tax benefit shall
273	273	be deemed to have resulted if the amount of the tax had been deducted in
274	274	determining income subject to a Kansas income tax for a prior year
275	275	regardless of the rate of taxation applied in such prior year to the Kansas
276	276	taxable income, but only that portion of the refund shall be included as
277	277	bears the same proportion to the total refund received as the federal taxes
278	278	deducted in the year to which such refund is attributable bears to the total
279	279	federal income taxes paid for such year. For purposes of the foregoing
280	280	sentence, federal taxes shall be considered to have been deducted only to
281	281	the extent such deduction does not reduce Kansas taxable income below
282	282	zero.
283	283	(v) The amount of any depreciation deduction or business expense
284	284	deduction claimed on the taxpayer's federal income tax return for any
285	285	capital expenditure in making any building or facility accessible to the
286	286	handicapped, for which expenditure the taxpayer claimed the credit
287	287	allowed by K.S.A. 79-32,177, and amendments thereto.
288	288	(vi) Any amount of designated employee contributions picked up by
289	289	an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
290	290	and amendments thereto.
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334	334	(vii) The amount of any charitable contribution made to the extent the
335	335	same is claimed as the basis for the credit allowed pursuant to K.S.A. 79-
336	336	32,196, and amendments thereto.
337	337	(viii) The amount of any costs incurred for improvements to a swine
338	338	facility, claimed for deduction in determining federal adjusted gross
339	339	income, to the extent the same is claimed as the basis for any credit
340	340	allowed pursuant to K.S.A. 79-32,204, and amendments thereto.
341	341	(ix) The amount of any ad valorem taxes and assessments paid and
342	342	the amount of any costs incurred for habitat management or construction
343	343	and maintenance of improvements on real property, claimed for deduction
344	344	in determining federal adjusted gross income, to the extent the same is
345	345	claimed as the basis for any credit allowed pursuant to K.S.A. 79-32,203,
346	346	and amendments thereto.
347	347	(x) Amounts received as nonqualified withdrawals, as defined by
348	348	K.S.A. 75-643, and amendments thereto, if, at the time of contribution to a
349	349	family postsecondary education savings account, such amounts were
350	350	subtracted from the federal adjusted gross income pursuant to subsection
351	351	(c)(xv) or if such amounts are not already included in the federal adjusted
352	352	gross income.
353	353	(xi) The amount of any contribution made to the same extent the
354	354	same is claimed as the basis for the credit allowed pursuant to K.S.A. 74-
355	355	50,154, and amendments thereto.
356	356	(xii) For taxable years commencing after December 31, 2004,
357	357	amounts received as withdrawals not in accordance with the provisions of
358	358	K.S.A. 74-50,204, and amendments thereto, if, at the time of contribution
359	359	to an individual development account, such amounts were subtracted from
360	360	the federal adjusted gross income pursuant to subsection (c)(xiii), or if
361	361	such amounts are not already included in the federal adjusted gross
362	362	income.
363	363	(xiii) The amount of any expenditures claimed for deduction in
364	364	determining federal adjusted gross income, to the extent the same is
365	365	claimed as the basis for any credit allowed pursuant to K.S.A. 79-32,217
366	366	through 79-32,220 or 79-32,222, and amendments thereto.
367	367	(xiv) The amount of any amortization deduction claimed in
368	368	determining federal adjusted gross income to the extent the same is
369	369	claimed for deduction pursuant to K.S.A. 79-32,221, and amendments
370	370	thereto.
371	371	(xv) The amount of any expenditures claimed for deduction in
372	372	determining federal adjusted gross income, to the extent the same is
373	373	claimed as the basis for any credit allowed pursuant to K.S.A. 79-32,223
374	374	through 79-32,226, 79-32,228 through 79-32,231, 79-32,233 through 79-
375	375	32,236, 79-32,238 through 79-32,241, 79-32,245 through 79-32,248 or 79-
376	376	32,251 through 79-32,254, and amendments thereto.
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420	420	(xvi) The amount of any amortization deduction claimed in
421	421	determining federal adjusted gross income to the extent the same is
422	422	claimed for deduction pursuant to K.S.A. 79-32,227, 79-32,232, 79-
423	423	32,237, 79-32,249, 79-32,250 or 79-32,255, and amendments thereto.
424	424	(xvii) The amount of any amortization deduction claimed in
425	425	determining federal adjusted gross income to the extent the same is
426	426	claimed for deduction pursuant to K.S.A. 79-32,256, and amendments
427	427	thereto.
428	428	(xviii) For taxable years commencing after December 31, 2006, the
429	429	amount of any ad valorem or property taxes and assessments paid to a state
430	430	other than Kansas or local government located in a state other than Kansas
431	431	by a taxpayer who resides in a state other than Kansas, when the law of
432	432	such state does not allow a resident of Kansas who earns income in such
433	433	other state to claim a deduction for ad valorem or property taxes or
434	434	assessments paid to a political subdivision of the state of Kansas in
435	435	determining taxable income for income tax purposes in such other state, to
436	436	the extent that such taxes and assessments are claimed as an itemized
437	437	deduction for federal income tax purposes.
438	438	(xix) For taxable years beginning after December 31, 2012, and
439	439	ending before January 1, 2017, the amount of any: (1) Loss from business
440	440	as determined under the federal internal revenue code and reported from
441	441	schedule C and on line 12 of the taxpayer's form 1040 federal individual
442	442	income tax return; (2) loss from rental real estate, royalties, partnerships, S
443	443	corporations, except those with wholly owned subsidiaries subject to the
444	444	Kansas privilege tax, estates, trusts, residual interest in real estate
445	445	mortgage investment conduits and net farm rental as determined under the
446	446	federal internal revenue code and reported from schedule E and on line 17
447	447	of the taxpayer's form 1040 federal individual income tax return; and (3)
448	448	farm loss as determined under the federal internal revenue code and
449	449	reported from schedule F and on line 18 of the taxpayer's form 1040
450	450	federal income tax return; all to the extent deducted or subtracted in
451	451	determining the taxpayer's federal adjusted gross income. For purposes of
452	452	this subsection, references to the federal form 1040 and federal schedule
453	453	C, schedule E, and schedule F, shall be to such form and schedules as they
454	454	existed for tax year 2011, and as revised thereafter by the internal revenue
455	455	service.
456	456	(xx) For taxable years beginning after December 31, 2012, and
457	457	ending before January 1, 2017, the amount of any deduction for self-
458	458	employment taxes under section 164(f) of the federal internal revenue
459	459	code as in effect on January 1, 2012, and amendments thereto, in
460	460	determining the federal adjusted gross income of an individual taxpayer, to
461	461	the extent the deduction is attributable to income reported on schedule C,
462	462	E or F and on line 12, 17 or 18 of the taxpayer's form 1040 federal income
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506	506	tax return.
507	507	(xxi) For taxable years beginning after December 31, 2012, and
508	508	ending before January 1, 2017, the amount of any deduction for pension,
509	509	profit sharing, and annuity plans of self-employed individuals under
510	510	section 62(a)(6) of the federal internal revenue code as in effect on January
511	511	1, 2012, and amendments thereto, in determining the federal adjusted gross
512	512	income of an individual taxpayer.
513	513	(xxii) For taxable years beginning after December 31, 2012, and
514	514	ending before January 1, 2017, the amount of any deduction for health
515	515	insurance under section 162(l) of the federal internal revenue code as in
516	516	effect on January 1, 2012, and amendments thereto, in determining the
517	517	federal adjusted gross income of an individual taxpayer.
518	518	(xxiii) For taxable years beginning after December 31, 2012, and
519	519	ending before January 1, 2017, the amount of any deduction for domestic
520	520	production activities under section 199 of the federal internal revenue code
521	521	as in effect on January 1, 2012, and amendments thereto, in determining
522	522	the federal adjusted gross income of an individual taxpayer.
523	523	(xxiv) For taxable years commencing after December 31, 2013, that
524	524	portion of the amount of any expenditure deduction claimed in
525	525	determining federal adjusted gross income for expenses paid for medical
526	526	care of the taxpayer or the taxpayer's spouse or dependents when such
527	527	expenses were paid or incurred for an abortion, or for a health benefit plan,
528	528	as defined in K.S.A. 65-6731, and amendments thereto, for the purchase of
529	529	an optional rider for coverage of abortion in accordance with K.S.A. 40-
530	530	2,190, and amendments thereto, to the extent that such taxes and
531	531	assessments are claimed as an itemized deduction for federal income tax
532	532	purposes.
533	533	(xxv) For taxable years commencing after December 31, 2013, that
534	534	portion of the amount of any expenditure deduction claimed in
535	535	determining federal adjusted gross income for expenses paid by a taxpayer
536	536	for health care when such expenses were paid or incurred for abortion
537	537	coverage, a health benefit plan, as defined in K.S.A. 65-6731, and
538	538	amendments thereto, when such expenses were paid or incurred for
539	539	abortion coverage or amounts contributed to health savings accounts for
540	540	such taxpayer's employees for the purchase of an optional rider for
541	541	coverage of abortion in accordance with K.S.A. 40-2,190, and
542	542	amendments thereto, to the extent that such taxes and assessments are
543	543	claimed as a deduction for federal income tax purposes.
544	544	(xxvi) For all taxable years beginning after December 31, 2016, the
545	545	amount of any charitable contribution made to the extent the same is
546	546	claimed as the basis for the credit allowed pursuant to K.S.A. 72-4357, and
547	547	amendments thereto, and is also claimed as an itemized deduction for
548	548	federal income tax purposes.
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592	592	(xxvii) For all taxable years commencing after December 31, 2020,
593	593	the amount of any interest expense paid or accrued in a previous taxable
594	594	year but allowed as a deduction pursuant to section 163 of the federal
595	595	internal revenue code in the current taxable year by reason of the
596	596	carryforward of disallowed business interest pursuant to section 163(j) of
597	597	the federal internal revenue code. For purposes of this paragraph, an
598	598	interest expense is considered paid or accrued only in the first taxable year
599	599	the deduction would have been allowable pursuant to section 163 of the
600	600	federal internal revenue code if the limitation pursuant to section 163(j) of
601	601	the federal internal revenue code did not exist.
602	602	(xxviii) For all taxable years beginning after December 31, 2021, the
603	603	amount of any contributions to, or earnings from, a first-time home buyer
604	604	savings account if distributions from the account were not used to pay for
605	605	expenses or transactions authorized pursuant to K.S.A. 2024 Supp. 58-
606	606	4904, and amendments thereto, or were not held for the minimum length
607	607	of time required pursuant to K.S.A. 2024 Supp. 58-4904, and amendments
608	608	thereto. Contributions to, or earnings from, such account shall also include
609	609	any amount resulting from the account holder not designating a surviving
610	610	payable on death beneficiary pursuant to K.S.A. 2024 Supp. 58-4904(e),
611	611	and amendments thereto.
612	612	(xxix) For all taxable years beginning after December 31, 2024, the
613	613	amount of any contributions to, or earnings from, an adoption savings
614	614	account if distributions from the account were not used to pay for expenses
615	615	or transactions authorized pursuant to K.S.A. 2024 Supp. 38-2504, and
616	616	amendments thereto, or were not held for the minimum length of time
617	617	required pursuant to K.S.A. 2024 Supp. 38-2504, and amendments thereto.
618	618	Contributions to, or earnings from, such account shall also include any
619	619	amount resulting from the account holder not designating a surviving
620	620	payable on death beneficiary pursuant to K.S.A. 2024 Supp. 38-2504(e),
621	621	and amendments thereto.
622	622	(xxx) For all taxable years beginning after December 31, 2025, the
623	623	amount of any distributions or withdrawals from an insurance savings
624	624	account that were not used to pay for expenses or transactions authorized
625	625	pursuant to section 4, and amendments thereto. Such amount shall also
626	626	include any amount resulting from the account holder not designating a
627	627	surviving payable on death beneficiary pursuant to section 4(d), and
628	628	amendments thereto.
629	629	(c) There shall be subtracted from federal adjusted gross income:
630	630	(i) Interest or dividend income on obligations or securities of any
631	631	authority, commission or instrumentality of the United States and its
632	632	possessions less any related expenses directly incurred in the purchase of
633	633	such obligations or securities, to the extent included in federal adjusted
634	634	gross income but exempt from state income taxes under the laws of the
635	635	1
636	636	2
637	637	3
638	638	4
639	639	5
640	640	6
641	641	7
642	642	8
643	643	9
644	644	10
645	645	11
646	646	12
647	647	13
648	648	14
649	649	15
650	650	16
651	651	17
652	652	18
653	653	19
654	654	20
655	655	21
656	656	22
657	657	23
658	658	24
659	659	25
660	660	26
661	661	27
662	662	28
663	663	29
664	664	30
665	665	31
666	666	32
667	667	33
668	668	34
669	669	35
670	670	36
671	671	37
672	672	38
673	673	39
674	674	40
675	675	41
676	676	42
677	677	43 SB 25 9
678	678	United States.
679	679	(ii) Any amounts received which are included in federal adjusted
680	680	gross income but which are specifically exempt from Kansas income
681	681	taxation under the laws of the state of Kansas.
682	682	(iii) The portion of any gain or loss from the sale or other disposition
683	683	of property having a higher adjusted basis for Kansas income tax purposes
684	684	than for federal income tax purposes on the date such property was sold or
685	685	disposed of in a transaction in which gain or loss was recognized for
686	686	purposes of federal income tax that does not exceed such difference in
687	687	basis, but if a gain is considered a long-term capital gain for federal
688	688	income tax purposes, the modification shall be limited to that portion of
689	689	such gain which is included in federal adjusted gross income.
690	690	(iv) The amount necessary to prevent the taxation under this act of
691	691	any annuity or other amount of income or gain which was properly
692	692	included in income or gain and was taxed under the laws of this state for a
693	693	taxable year prior to the effective date of this act, as amended, to the
694	694	taxpayer, or to a decedent by reason of whose death the taxpayer acquired
695	695	the right to receive the income or gain, or to a trust or estate from which
696	696	the taxpayer received the income or gain.
697	697	(v) The amount of any refund or credit for overpayment of taxes on
698	698	or measured by income or fees or payments in lieu of income taxes
699	699	imposed by this state, or any taxing jurisdiction, to the extent included in
700	700	gross income for federal income tax purposes.
701	701	(vi) Accumulation distributions received by a taxpayer as a
702	702	beneficiary of a trust to the extent that the same are included in federal
703	703	adjusted gross income.
704	704	(vii) Amounts received as annuities under the federal civil service
705	705	retirement system from the civil service retirement and disability fund and
706	706	other amounts received as retirement benefits in whatever form which
707	707	were earned for being employed by the federal government or for service
708	708	in the armed forces of the United States.
709	709	(viii) Amounts received by retired railroad employees as a
710	710	supplemental annuity under the provisions of 45 U.S.C. §§ 228b(a) and
711	711	228c(a)(1) et seq.
712	712	(ix) Amounts received by retired employees of a city and by retired
713	713	employees of any board of such city as retirement allowances pursuant to
714	714	K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
715	715	ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
716	716	amendments thereto.
717	717	(x) (1) For taxable years beginning after December 31, 2021, the
718	718	amount of any federal credit disallowance under the provisions of 26
719	719	U.S.C. § 280C(a).
720	720	(2) For taxable years beginning after December 31, 2019, and ending
721	721	1
722	722	2
723	723	3
724	724	4
725	725	5
726	726	6
727	727	7
728	728	8
729	729	9
730	730	10
731	731	11
732	732	12
733	733	13
734	734	14
735	735	15
736	736	16
737	737	17
738	738	18
739	739	19
740	740	20
741	741	21
742	742	22
743	743	23
744	744	24
745	745	25
746	746	26
747	747	27
748	748	28
749	749	29
750	750	30
751	751	31
752	752	32
753	753	33
754	754	34
755	755	35
756	756	36
757	757	37
758	758	38
759	759	39
760	760	40
761	761	41
762	762	42
763	763	43 SB 25 10
764	764	before January 1, 2022, 50% of the amount of the federal employee
765	765	retention credit disallowance under rules similar to the rules of 26 U.S.C. §
766	766	280C(a). The taxpayer shall be required to prove that such taxpayer
767	767	previously filed Kansas income tax returns and paid Kansas income tax on
768	768	the disallowed amount. Notwithstanding any other provision of law to the
769	769	contrary, any claim for refund or amended return relating to this
770	770	subparagraph shall be allowed to be filed on or before April 15, 2025, and
771	771	no claim for refund or amended return shall be allowed or filed after April
772	772	15, 2025.
773	773	(xi) For taxable years beginning after December 31, 1986, dividend
774	774	income on stock issued by Kansas venture capital, inc.
775	775	(xii) For taxable years beginning after December 31, 1989, amounts
776	776	received by retired employees of a board of public utilities as pension and
777	777	retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249,
778	778	and amendments thereto.
779	779	(xiii) For taxable years beginning after December 31, 2004, amounts
780	780	contributed to and the amount of income earned on contributions deposited
781	781	to an individual development account under K.S.A. 74-50,201 et seq., and
782	782	amendments thereto.
783	783	(xiv) For all taxable years commencing after December 31, 1996, that
784	784	portion of any income of a bank organized under the laws of this state or
785	785	any other state, a national banking association organized under the laws of
786	786	the United States, an association organized under the savings and loan
787	787	code of this state or any other state, or a federal savings association
788	788	organized under the laws of the United States, for which an election as an
789	789	S corporation under subchapter S of the federal internal revenue code is in
790	790	effect, which accrues to the taxpayer who is a stockholder of such
791	791	corporation and which is not distributed to the stockholders as dividends of
792	792	the corporation. For taxable years beginning after December 31, 2012, and
793	793	ending before January 1, 2017, the amount of modification under this
794	794	subsection shall exclude the portion of income or loss reported on schedule
795	795	E and included on line 17 of the taxpayer's form 1040 federal individual
796	796	income tax return.
797	797	(xv) The cumulative amounts not exceeding $3,000, or $6,000 for a
798	798	married couple filing a joint return, for each designated beneficiary that
799	799	are contributed to: (1) A family postsecondary education savings account
800	800	established under the Kansas postsecondary education savings program or
801	801	a qualified tuition program established and maintained by another state or
802	802	agency or instrumentality thereof pursuant to section 529 of the internal
803	803	revenue code of 1986, as amended, for the purpose of paying the qualified
804	804	higher education expenses of a designated beneficiary; or (2) an achieving
805	805	a better life experience (ABLE) account established under the Kansas
806	806	ABLE savings program or a qualified ABLE program established and
807	807	1
808	808	2
809	809	3
810	810	4
811	811	5
812	812	6
813	813	7
814	814	8
815	815	9
816	816	10
817	817	11
818	818	12
819	819	13
820	820	14
821	821	15
822	822	16
823	823	17
824	824	18
825	825	19
826	826	20
827	827	21
828	828	22
829	829	23
830	830	24
831	831	25
832	832	26
833	833	27
834	834	28
835	835	29
836	836	30
837	837	31
838	838	32
839	839	33
840	840	34
841	841	35
842	842	36
843	843	37
844	844	38
845	845	39
846	846	40
847	847	41
848	848	42
849	849	43 SB 25 11
850	850	maintained by another state or agency or instrumentality thereof pursuant
851	851	to section 529A of the internal revenue code of 1986, as amended, for the
852	852	purpose of saving private funds to support an individual with a disability.
853	853	The terms and phrases used in this paragraph shall have the meaning
854	854	respectively ascribed thereto by the provisions of K.S.A. 75-643 and 75-
855	855	652, and amendments thereto, and the provisions of such sections are
856	856	hereby incorporated by reference for all purposes thereof. For all taxable
857	857	years beginning after December 31, 2022, contributions made to a
858	858	qualified tuition program account or a qualified ABLE program account
859	859	pursuant to this paragraph on and after January 1 but prior to the date
860	860	required for filing a return pursuant to K.S.A. 79-3221, and amendments
861	861	thereto, of the successive taxable year may be elected by the taxpayer to
862	862	apply to the prior taxable year if such election is made at the time of filing
863	863	the return. No contribution shall be used as a modification pursuant to this
864	864	paragraph in more than one taxable year.
865	865	(xvi) For all taxable years beginning after December 31, 2004,
866	866	amounts received by taxpayers who are or were members of the armed
867	867	forces of the United States, including service in the Kansas army and air
868	868	national guard, as a recruitment, sign up or retention bonus received by
869	869	such taxpayer as an incentive to join, enlist or remain in the armed services
870	870	of the United States, including service in the Kansas army and air national
871	871	guard, and amounts received for repayment of educational or student loans
872	872	incurred by or obligated to such taxpayer and received by such taxpayer as
873	873	a result of such taxpayer's service in the armed forces of the United States,
874	874	including service in the Kansas army and air national guard.
875	875	(xvii) For all taxable years beginning after December 31, 2004,
876	876	amounts received by taxpayers who are eligible members of the Kansas
877	877	army and air national guard as a reimbursement pursuant to K.S.A. 48-
878	878	281, and amendments thereto, and amounts received for death benefits
879	879	pursuant to K.S.A. 48-282, and amendments thereto, to the extent that
880	880	such death benefits are included in federal adjusted gross income of the
881	881	taxpayer.
882	882	(xviii) (A) For all taxable years beginning after December 31, 2007,
883	883	and ending before January 1, 2024, amounts received as benefits under the
884	884	federal social security act which are included in federal adjusted gross
885	885	income of a taxpayer with federal adjusted gross income of $75,000 or
886	886	less, whether such taxpayer's filing status is single, head of household,
887	887	married filing separate or married filing jointly.
888	888	(B) For all taxable years beginning after December 31, 2023, amounts
889	889	received as benefits under the federal social security act that are included
890	890	in federal adjusted gross income of a taxpayer.
891	891	(xix) Amounts received by retired employees of Washburn university
892	892	as retirement and pension benefits under the university's retirement plan.
893	893	1
894	894	2
895	895	3
896	896	4
897	897	5
898	898	6
899	899	7
900	900	8
901	901	9
902	902	10
903	903	11
904	904	12
905	905	13
906	906	14
907	907	15
908	908	16
909	909	17
910	910	18
911	911	19
912	912	20
913	913	21
914	914	22
915	915	23
916	916	24
917	917	25
918	918	26
919	919	27
920	920	28
921	921	29
922	922	30
923	923	31
924	924	32
925	925	33
926	926	34
927	927	35
928	928	36
929	929	37
930	930	38
931	931	39
932	932	40
933	933	41
934	934	42
935	935	43 SB 25 12
936	936	(xx) For taxable years beginning after December 31, 2012, and
937	937	ending before January 1, 2017, the amount of any: (1) Net profit from
938	938	business as determined under the federal internal revenue code and
939	939	reported from schedule C and on line 12 of the taxpayer's form 1040
940	940	federal individual income tax return; (2) net income, not including
941	941	guaranteed payments as defined in section 707(c) of the federal internal
942	942	revenue code and as reported to the taxpayer from federal schedule K-1,
943	943	(form 1065-B), in box 9, code F or as reported to the taxpayer from federal
944	944	schedule K-1, (form 1065) in box 4, from rental real estate, royalties,
945	945	partnerships, S corporations, estates, trusts, residual interest in real estate
946	946	mortgage investment conduits and net farm rental as determined under the
947	947	federal internal revenue code and reported from schedule E and on line 17
948	948	of the taxpayer's form 1040 federal individual income tax return; and (3)
949	949	net farm profit as determined under the federal internal revenue code and
950	950	reported from schedule F and on line 18 of the taxpayer's form 1040
951	951	federal income tax return; all to the extent included in the taxpayer's
952	952	federal adjusted gross income. For purposes of this subsection, references
953	953	to the federal form 1040 and federal schedule C, schedule E, and schedule
954	954	F, shall be to such form and schedules as they existed for tax year 2011
955	955	and as revised thereafter by the internal revenue service.
956	956	(xxi) For all taxable years beginning after December 31, 2013,
957	957	amounts equal to the unreimbursed travel, lodging and medical
958	958	expenditures directly incurred by a taxpayer while living, or a dependent
959	959	of the taxpayer while living, for the donation of one or more human organs
960	960	of the taxpayer, or a dependent of the taxpayer, to another person for
961	961	human organ transplantation. The expenses may be claimed as a
962	962	subtraction modification provided for in this section to the extent the
963	963	expenses are not already subtracted from the taxpayer's federal adjusted
964	964	gross income. In no circumstances shall the subtraction modification
965	965	provided for in this section for any individual, or a dependent, exceed
966	966	$5,000. As used in this section, "human organ" means all or part of a liver,
967	967	pancreas, kidney, intestine, lung or bone marrow. The provisions of this
968	968	paragraph shall take effect on the day the secretary of revenue certifies to
969	969	the director of the budget that the cost for the department of revenue of
970	970	modifications to the automated tax system for the purpose of
971	971	implementing this paragraph will not exceed $20,000.
972	972	(xxii) For taxable years beginning after December 31, 2012, and
973	973	ending before January 1, 2017, the amount of net gain from the sale of: (1)
974	974	Cattle and horses, regardless of age, held by the taxpayer for draft,
975	975	breeding, dairy or sporting purposes, and held by such taxpayer for 24
976	976	months or more from the date of acquisition; and (2) other livestock,
977	977	regardless of age, held by the taxpayer for draft, breeding, dairy or
978	978	sporting purposes, and held by such taxpayer for 12 months or more from
979	979	1
980	980	2
981	981	3
982	982	4
983	983	5
984	984	6
985	985	7
986	986	8
987	987	9
988	988	10
989	989	11
990	990	12
991	991	13
992	992	14
993	993	15
994	994	16
995	995	17
996	996	18
997	997	19
998	998	20
999	999	21
1000	1000	22
1001	1001	23
1002	1002	24
1003	1003	25
1004	1004	26
1005	1005	27
1006	1006	28
1007	1007	29
1008	1008	30
1009	1009	31
1010	1010	32
1011	1011	33
1012	1012	34
1013	1013	35
1014	1014	36
1015	1015	37
1016	1016	38
1017	1017	39
1018	1018	40
1019	1019	41
1020	1020	42
1021	1021	43 SB 25 13
1022	1022	the date of acquisition. The subtraction from federal adjusted gross income
1023	1023	shall be limited to the amount of the additions recognized under the
1024	1024	provisions of subsection (b)(xix) attributable to the business in which the
1025	1025	livestock sold had been used. As used in this paragraph, the term
1026	1026	"livestock" shall not include poultry.
1027	1027	(xxiii) For all taxable years beginning after December 31, 2012,
1028	1028	amounts received under either the Overland Park, Kansas police
1029	1029	department retirement plan or the Overland Park, Kansas fire department
1030	1030	retirement plan, both as established by the city of Overland Park, pursuant
1031	1031	to the city's home rule authority.
1032	1032	(xxiv) For taxable years beginning after December 31, 2013, and
1033	1033	ending before January 1, 2017, the net gain from the sale from Christmas
1034	1034	trees grown in Kansas and held by the taxpayer for six years or more.
1035	1035	(xxv) For all taxable years commencing after December 31, 2020,
1036	1036	100% of global intangible low-taxed income under section 951A of the
1037	1037	federal internal revenue code of 1986, before any deductions allowed
1038	1038	under section 250(a)(1)(B) of such code.
1039	1039	(xxvi) (1) For all taxable years commencing after December 31,
1040	1040	2020, the amount of any interest expense paid or accrued in the current
1041	1041	taxable year and disallowed as a deduction pursuant to section 163(j) of
1042	1042	the federal internal revenue code.
1043	1043	(2) For purposes of this paragraph, an interest expense is considered
1044	1044	paid or accrued only in the first taxable year the deduction would have
1045	1045	been allowable pursuant to section 163 of the federal internal revenue code
1046	1046	if the limitation pursuant to section 163(j) of the federal internal revenue
1047	1047	code did not exist.
1048	1048	(3) For tax year 2021, an amount equal to the sum of any interest
1049	1049	expenses paid or accrued in tax years 2018, 2019 and 2020 less the sum of
1050	1050	amounts allowed as a deduction pursuant to section 163 of the federal
1051	1051	internal revenue code in tax years 2018, 2019 and 2020.
1052	1052	(xxvii) For taxable years commencing after December 31, 2020, the
1053	1053	amount disallowed as a deduction pursuant to section 274 of the federal
1054	1054	internal revenue code of 1986 for meal expenditures shall be allowed to
1055	1055	the extent such expense was deductible for determining federal income tax
1056	1056	and was allowed and in effect on December 31, 2017.
1057	1057	(xxviii) For all taxable years beginning after December 31, 2021: (1)
1058	1058	The amount contributed to a first-time home buyer savings account
1059	1059	pursuant to K.S.A. 2024 Supp. 58-4903, and amendments thereto, in an
1060	1060	amount not to exceed $3,000 for an individual or $6,000 for a married
1061	1061	couple filing a joint return; or (2) amounts received as income earned from
1062	1062	assets in a first-time home buyer savings account. For all taxable years
1063	1063	beginning after December 31, 2022, contributions made to a first-time
1064	1064	home buyer savings account pursuant to subparagraph (1) on and after
1065	1065	1
1066	1066	2
1067	1067	3
1068	1068	4
1069	1069	5
1070	1070	6
1071	1071	7
1072	1072	8
1073	1073	9
1074	1074	10
1075	1075	11
1076	1076	12
1077	1077	13
1078	1078	14
1079	1079	15
1080	1080	16
1081	1081	17
1082	1082	18
1083	1083	19
1084	1084	20
1085	1085	21
1086	1086	22
1087	1087	23
1088	1088	24
1089	1089	25
1090	1090	26
1091	1091	27
1092	1092	28
1093	1093	29
1094	1094	30
1095	1095	31
1096	1096	32
1097	1097	33
1098	1098	34
1099	1099	35
1100	1100	36
1101	1101	37
1102	1102	38
1103	1103	39
1104	1104	40
1105	1105	41
1106	1106	42
1107	1107	43 SB 25 14
1108	1108	January 1 but prior to the date required for filing a return pursuant to
1109	1109	K.S.A. 79-3221, and amendments thereto, of the successive taxable year
1110	1110	may be elected by the taxpayer to apply to the prior taxable year if such
1111	1111	election is made at the time of filing the return. No contribution shall be
1112	1112	used as a modification pursuant to subparagraph (1) in more than one
1113	1113	taxable year.
1114	1114	(xxix) For taxable years beginning after December 31, 2017, for an
1115	1115	individual taxpayer who carried back federal net operating losses arising in
1116	1116	a taxable year beginning after December 31, 2017, and before January 1,
1117	1117	2021, pursuant to section 172(b)(1) of the federal internal revenue code as
1118	1118	amended by the coronavirus aid, relief, and economic security act
1119	1119	(CARES act), the amount of such federal net operating loss carryback for
1120	1120	each applicable year. If the amount of such federal net operating loss
1121	1121	carryback exceeds the taxpayer's Kansas adjusted gross income for such
1122	1122	taxable year, the amount thereof that exceeds such Kansas adjusted gross
1123	1123	income may be carried forward as a subtraction modification in the
1124	1124	following taxable year or years until the total amount of such federal net
1125	1125	operating loss carryback has been deducted, except that no such unused
1126	1126	amount shall be carried forward for deduction as a subtraction
1127	1127	modification after the 20
1128	1128	th
1129	1129	taxable year following the taxable year of the
1130	1130	net operating loss. Notwithstanding any other provision of law to the
1131	1131	contrary, an extension of time shall be allowed for a claim for refund or
1132	1132	amended return for tax years 2018, 2019 or 2020 limited to the application
1133	1133	of the provisions of this paragraph and such claim for refund or amended
1134	1134	return must be filed on or before April 15, 2025.
1135	1135	(xxx) For all taxable years beginning after December 31, 2024: (1)
1136	1136	The amount contributed to an adoption savings account pursuant to K.S.A.
1137	1137	2024 Supp. 38-2503, and amendments thereto, in an amount not to exceed
1138	1138	$6,000 for an individual or $12,000 for a married couple filing a joint
1139	1139	return; or (2) amounts received as income earned from assets in an
1140	1140	adoption savings account.
1141	1141	(xxxi) For all taxable years beginning after December 31, 2025: (1)
1142	1142	The amount contributed to an insurance savings account pursuant to
1143	1143	section 3, and amendments thereto, in an amount not to exceed $6,000 for
1144	1144	an individual or $12,000 for a married couple filing a joint return; or (2)
1145	1145	amounts received as income earned from assets in an insurance savings
1146	1146	account, excluding amounts received as income earned from excess
1147	1147	contributions.
1148	1148	(d) There shall be added to or subtracted from federal adjusted gross
1149	1149	income the taxpayer's share, as beneficiary of an estate or trust, of the
1150	1150	Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
1151	1151	amendments thereto.
1152	1152	(e) The amount of modifications required to be made under this
1153	1153	1
1154	1154	2
1155	1155	3
1156	1156	4
1157	1157	5
1158	1158	6
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1195	1195	43 SB 25 15
1196	1196	section by a partner which relates to items of income, gain, loss, deduction
1197	1197	or credit of a partnership shall be determined under K.S.A. 79-32,131, and
1198	1198	amendments thereto, to the extent that such items affect federal adjusted
1199	1199	gross income of the partner.
1200	1200	Sec. 9. K.S.A. 2024 Supp. 79-32,138 is hereby amended to read as
1201	1201	follows: 79-32,138. (a) Kansas taxable income of a corporation taxable
1202	1202	under this act shall be the corporation's federal taxable income for the
1203	1203	taxable year with the modifications specified in this section, except that in
1204	1204	determination of such federal taxable income for all taxable years
1205	1205	commencing after December 31, 2020, section 118 of the federal internal
1206	1206	revenue code of 1986 shall be applied as in effect on December 21, 2017.
1207	1207	(b) There shall be added to federal taxable income:
1208	1208	(i) The same modifications as are set forth in K.S.A. 79-32,117(b),
1209	1209	and amendments thereto, with respect to resident individuals, except
1210	1210	subsections (b)(xix), (b)(xx), (b)(xxi), (b)(xxii) and (b)(xxiii);
1211	1211	(ii) the amount of all depreciation deductions claimed for any
1212	1212	property upon which the deduction allowed by K.S.A. 79-32,221, 79-
1213	1213	32,227, 79-32,232, 79-32,237, 79-32,249, 79-32,250, 79-32,255 or 79-
1214	1214	32,256, and amendments thereto, is claimed;
1215	1215	(iii) the amount of any charitable contribution deduction claimed for
1216	1216	any contribution or gift to or for the use of any racially segregated
1217	1217	educational institution;
1218	1218	(iv) for taxable years commencing December 31, 2013, that portion
1219	1219	of the amount of any expenditure deduction claimed in determining federal
1220	1220	adjusted gross income for expenses paid by a taxpayer for health care
1221	1221	when such expenses were paid or incurred for abortion coverage, a health
1222	1222	benefit plan, as defined in K.S.A. 65-6731, and amendments thereto, when
1223	1223	such expenses were paid or incurred for abortion coverage or amounts
1224	1224	contributed to health savings accounts for such taxpayer's employees for
1225	1225	the purchase of an optional rider for coverage of abortion in accordance
1226	1226	with K.S.A. 40-2,190, and amendments thereto;
1227	1227	(v) the amount of any charitable contribution deduction claimed for
1228	1228	any contribution or gift made to a scholarship granting organization to the
1229	1229	extent the same is claimed as the basis for the credit allowed pursuant to
1230	1230	K.S.A. 72-4357, and amendments thereto;
1231	1231	(vi) the federal net operating loss deduction; and
1232	1232	(vii) for all taxable years commencing after December 31, 2020, the
1233	1233	amount of any deduction claimed under section 250(a)(1)(B) of the federal
1234	1234	internal revenue code of 1986; and
1235	1235	(viii) for all taxable years commencing after December 31, 2025, the
1236	1236	amount of any distributions or withdrawals from an insurance savings
1237	1237	account that were not used to pay for expenses or transactions authorized
1238	1238	pursuant to section 4, and amendments thereto.
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1281	1281	43 SB 25 16
1282	1282	(c) There shall be subtracted from federal taxable income:
1283	1283	(i) The same modifications as are set forth in K.S.A. 79-32,117(c),
1284	1284	and amendments thereto, with respect to resident individuals, except
1285	1285	subsection (c)(xx);
1286	1286	(ii) the federal income tax liability for any taxable year commencing
1287	1287	prior to December 31, 1971, for which a Kansas return was filed after
1288	1288	reduction for all credits thereon, except credits for payments on estimates
1289	1289	of federal income tax, credits for gasoline and lubricating oil tax, and for
1290	1290	foreign tax credits if, on the Kansas income tax return for such prior year,
1291	1291	the federal income tax deduction was computed on the basis of the federal
1292	1292	income tax paid in such prior year, rather than as accrued. Notwithstanding
1293	1293	the foregoing, the deduction for federal income tax liability for any year
1294	1294	shall not exceed that portion of the total federal income tax liability for
1295	1295	such year which bears the same ratio to the total federal income tax
1296	1296	liability for such year as the Kansas taxable income, as computed before
1297	1297	any deductions for federal income taxes and after application of
1298	1298	subsections (d) and (e) as existing for such year, bears to the federal
1299	1299	taxable income for the same year;
1300	1300	(iii) an amount for the amortization deduction allowed pursuant to
1301	1301	K.S.A. 79-32,221, 79-32,227, 79-32,232, 79-32,237, 79-32,249, 79-
1302	1302	32,250, 79-32,255 or 79-32,256, and amendments thereto;
1303	1303	(iv) for all taxable years commencing after December 31, 1987, the
1304	1304	amount included in federal taxable income pursuant to the provisions of
1305	1305	section 78 of the internal revenue code;
1306	1306	(v) 80% of dividends from corporations incorporated outside of the
1307	1307	United States or the District of Columbia which are included in federal
1308	1308	taxable income. As used in this paragraph, "dividends" includes amounts
1309	1309	included in income under section 965 of the federal internal revenue code
1310	1310	of 1986, net of the deduction permitted by section 965(c) of the federal
1311	1311	internal revenue code of 1986. For all taxable years commencing after
1312	1312	December 31, 2020, this paragraph does not apply to amounts excluded
1313	1313	from income pursuant to K.S.A. 79-32,117(c)(xxv), and amendments
1314	1314	thereto, or amounts added back pursuant to K.S.A. 79-32,138(b)(vii), and
1315	1315	amendments thereto; and
1316	1316	(vi) for all taxable years commencing after December 31, 2020, the
1317	1317	amount disallowed as a deduction pursuant to section 162(r) of the federal
1318	1318	internal revenue code of 1986, as in effect on January 1, 2018; and
1319	1319	(vii) for all taxable years commencing after December 31, 2025: (1)
1320	1320	The amount contributed to an insurance savings account pursuant to
1321	1321	section 3, and amendments thereto, in an amount not to exceed $25,000;
1322	1322	or (2) amounts received as income earned from assets in an insurance
1323	1323	savings account, excluding amounts received as income earned from
1324	1324	excess contributions.
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1367	1367	43 SB 25 17
1368	1368	(d) If any corporation derives all of its income from sources within
1369	1369	Kansas in any taxable year commencing after December 31, 1979, its
1370	1370	Kansas taxable income shall be the sum resulting after application of
1371	1371	subsections (a) through (c). Otherwise, such corporation's Kansas taxable
1372	1372	income in any such taxable year, after excluding any refunds of federal
1373	1373	income tax and before the deduction of federal income taxes provided by
1374	1374	subsection (c)(ii) shall be allocated as provided in K.S.A. 79-3271 through
1375	1375	79-3293, and amendments thereto, plus any refund of federal income tax
1376	1376	as determined under K.S.A. 79-32,117(b)(iv), and amendments thereto,
1377	1377	and minus the deduction for federal income taxes as provided by
1378	1378	subsection (c)(ii) shall be such corporation's Kansas taxable income.
1379	1379	(e) A corporation may make an election with respect to its first
1380	1380	taxable year commencing after December 31, 1982, whereby no addition
1381	1381	modifications as provided for in subsection (b)(ii) and subtraction
1382	1382	modifications as provided for in subsection (c)(iii) as those subsections
1383	1383	existed prior to their amendment by this act, shall be required to be made
1384	1384	for such taxable year.
1385	1385	Sec. 10. K.S.A. 2024 Supp. 79-32,117 and 79-32,138 are hereby
1386	1386	repealed.
1387	1387	Sec. 11. This act shall take effect and be in force from and after its
1388	1388	publication in the statute book.
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