SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE BILL NO. 33
As Amended by Senate Committee of the Whole

Brief*
SB 33, as amended, would make changes to income
taxes. The bill would provide for a cost of living adjustment for
the standard deduction amounts, expand the exemption of
Social Security benefits, create an exemption for retirement
plan income, make changes to the Homestead Property Tax
Refund Program, and create subtraction modifications related
to net operating losses and certain federal tax credit
disallowances.

Standard Deduction Cost of Living Adjustment
The bill would provide, beginning in tax year 2023, for
the Kansas individual income tax standard deduction
amounts to be annually increased by the cost of living
adjustment (COLA) provided for by Section 1(f)(3) of the
Internal Revenue Code.

Social Security Benefits
The bill would expand the Kansas individual income tax
exemption for Social Security benefits to include all federally
taxable Social Security benefits beginning in tax year 2023.


____________________
*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
Retirement Plan Income
The bill would exempt all federally taxable income
received under all retirement plans beginning in tax year
2024.

Homestead Property Tax Refund Changes
The bill would make changes to the refund option
providing for a refund of the amount of tax in excess of the
base year amount under the Homestead Property Tax Refund
Act.
[Note: The Homestead Property Tax Refund Act includes
three different refund options. The other two refund options
would not be impacted by the bill.]
The bill would, for purposes of only this refund option,
exclude from the definition of “household income” all Social
Security benefits, of which one-half are currently included in
the definition.
The bill would increase the maximum appraised value of
an eligible claimant’s home in the base year from $350,000 to
$595,000 and provide for future increases to this amount
based upon the average percentage change in statewide
residential valuation of existing residential real estate for the
preceding 10 years.
The changes would be retroactive to tax year 2022, and
the deadline to file claims for tax year 2022 would be
extended from April 15, 2023, to April 15, 2024.

Net Operating Loss Subtraction Modification
The bill would create a subtraction modification allowing
taxpayers who carried back federal net operating losses in
tax years 2018 through 2020 pursuant to the federal

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Coronavirus Aid, Relief, and Economic Security (CARES) Act
to subtract such amounts from their income for purposes of
determining Kansas adjusted gross income. Taxpayers 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
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 percent of the
amount of federal disallowance related to the Employee
Retention Tax Credit.

Background
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 AARP of Kansas and the
Wichita Regional Chamber of Commerce. Proponents stated
the bill would allow for benefits to be taxed as a social safety
net benefit rather than income and would allow for greater
economic activity by benefit recipients in the state of Kansas.

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 Written-only proponent testimony was provided by
representatives of the Kansas Policy Institute and the League
of Kansas Municipalities and a private citizen.
No other testimony was provided.

Senate Committee of the Whole
The Senate Committee of the Whole amended the bill to
insert the provisions relating to retirement plan income and
the contents of SB 30; SB 40; SB 80, as amended by the
Senate Committee on Assessment and Taxation; and SB 81.
The background information for those bills is provided below.

SB 30 (Standard Deduction COLA)
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 for Americans for
Prosperity, stating the bill would protect low-income Kansans
from inflation and maintain Kansans’ after-tax purchasing
power.
Written-only proponent testimony was provided by a
representative of the Kansas Policy Institute.
No other testimony was provided.

SB 40 (Net Operating Loss [NOL] Subtraction
Modification)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.

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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
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 80 (Homestead Property Tax Refund Changes)
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, written-only
proponent testimony was provided by a representative of the
Kansas Policy Institute.
Neutral testimony was provided by a representative of
the Military Officers Association of America-Kansas.
No other testimony was provided.
The Senate Committee amended the bill to increase the
maximum appraised value of a claimant’s home and provide
for retroactivity of the provisions of the bill.

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.

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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.

Fiscal Information
The Department of Revenue indicates enactment of the
bill would have the following impact on State General Fund
receipts.
($ in millions)
Provision FY 2024 FY 2025 FY 2026
Standard Deduction $ (24.5) $ (32.4) $ (42.3)
COLA
Social Security (147.6) (117.2) (120.7)
Exemption
Retirement Plan (79.8) (266.8) (269.4)
Exemption
Homestead Property (12.9) (13.2) (17.9)
Tax Refund
NOL Carrybacks (8.4) (8.4) -
Employment Credit (7.0) (2.5) (1.1)
Disallowances
Total $ (280.2) $ (440.5) $ (451.4)

The specific fiscal effect associated with the bill is not
reflected in The FY 2024 Governor’s Budget Report. A
different version of an expansion of the Social Security

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benefits income tax exemption is reflected in The FY 2024
Governor’s Budget Report.
Taxation; income tax; Social Security benefits; retirement plan income; net operating
losses; disallowances; Employee Retention Credit; Work Opportunity Tax Credit;
Homestead Program; refunds; subtraction modifications


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Statutes affected:
As introduced: 79-32
{As Amended by Senate Committee of the Whole}: 79-32, 79-4508a