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 2425 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2425 is
respectfully submitted to your committee.
HB 2425 would establish a refundable income tax credit for tuition payments made to
postsecondary educational institutions. The tax credit would be equivalent to 100.0 percent of the
tuition payment made during the taxable year and be limited to $150 per qualified taxpayer. To
qualify for the tax credit, a taxpayer would be required to be a Kansas resident who has paid tuition
for attendance at an eligible postsecondary institution for themselves, a child, or a stepchild. 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 -- -- ($30,000,000) ($30,000,000)
Expenditure -- -- $92,216 $92,216
FTE Pos. -- -- -- --
The Department of Revenue estimates that HB 2425 would decrease State General Fund
revenues by $30.0 million in FY 2024 and subsequent fiscal years. To formulate these estimates,
the Department of Revenue reviewed data on postsecondary institution enrollment, indicating that
there are approximately 200,000 Kansas residents attending eligible institutions. Assuming all
students claim the maximum refundable credit of $150, the fiscal effect would total $30.0 million
per fiscal year.
The Honorable Adam Smith, Chairperson
Page 2—HB 2425

The Department indicates that the bill would require $92,216 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 Board of Regents indicates the bill would have no direct impact on the higher
education system. The bill has the potential to encourage additional students to enroll in courses
to gain the tax credit benefit, which could result in more tuition income for the educational
institutions. However, it is not possible to estimate the number of students who would choose to
attend an educational institution because of the provisions of the bill. Any fiscal effect associated
with HB 2425 is not reflected in The FY 2024 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Becky Pottebaum, Board of Regents
Lynn Robinson, Department of Revenue