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 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


March 10, 2023


The Honorable Adam Smith, Chairperson
House Committee on Taxation
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2424 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2424 is
respectfully submitted to your committee.
HB 2424 would establish a refundable income, privilege, or premium tax credit for direct
payments made by employers for student loans on behalf of a qualified employee. The credit
would be equivalent to 50.0 percent of the payment made on a student loan during the taxable year
and would be limited to $5,250 per eligible student and $500,000 per taxpayer. The cumulative
amount of all tax credits that can be claimed is capped at $5.0 million per tax year. A qualified
employee would be defined as a Kansas resident who has received a student loan, is not an owner
or partner of the employer, and has completed their first bachelor’s degree within the preceding
five years. The credit would be in effect from tax year 2023 through tax year 2027.

Estimated State Fiscal Effect
FY 2023 FY 2023 FY 2024 FY 2024
SGF All Funds SGF All Funds
Revenue -- -- ($5,000,000) ($5,000,000)
Expenditure -- -- $128,781 $128,781
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2424 would decrease State General Fund
revenues by $5.0 million in FY 2024 and subsequent fiscal years. To formulate these estimates,
the Department of Revenue reviewed data on student loan debt from the Federal Reserve. The
Federal Reserve estimates that 640,000 Kansas citizens hold a bachelor’s degree or better, and that
The Honorable Adam Smith, Chairperson
Page 2—HB 2424

the average student loan balance is $33,000. If employers in Kansas paid the maximum amount
allowed per employee of $5,250 in student debt for 950 qualified employees, the total impact each
year would be $5.0 million in refundable credits.
The Department indicates that the bill would require $128,781 from the State General Fund
in FY 2024 to implement the bill and to modify the automated tax system. The required
programming for this bill by itself would be performed by existing staff of the Department of
Revenue. In addition, if the combined effect of implementing this bill and other enacted legislation
exceeds the Department’s programming resources, or if the time for implementing the changes is
too short, additional expenditures for outside contract programmer services beyond the
Department’s current budget may be required.
The Insurance Department indicates that the bill would also allow insurance companies to
claim this new tax credit. If insurance companies claim this tax credit, then it would reduce
insurance premiums taxes collections that are distributed to the Start General Fund (99.0 percent)
and the Insurance Service Regulation Fund (1.0 percent). The Insurance Department indicates the
computer programming costs to allow the processing of insurance premium tax returns with this
new tax credit would be negligible and could be absorbed within existing resources. Any fiscal
effect associated with HB 2424 is not reflected in The FY 2024 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Bobbi Mariani, Insurance Department