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 C. Proffitt, Director Laura Kelly, Governor


February 19, 2024


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 2687 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2687 is
respectfully submitted to your committee.
HB 2687 would provide a refundable child tax credit beginning in tax year 2024 for each
qualifying child of the taxpayer based on their Kansas adjusted gross income as follows:
Amount of the Credit
Kansas Adjusted Gross Income Per Qualifying Child
Under $25,000 $600
Over $25,000 but under $50,000 $400
Over $50,000 but under $75,000 $200
Over $75,000 but under $100,000 $100
Over $100,000 but under $200,000 $75
Over $200,000 but under $350,000 $50
Over $350,000 $25
Married individuals filing separate returns for a tax year in which they could have filed a
joint return would only be able to each claim half the amount of the tax credit per qualifying child
that would have been claimed on a joint return. The bill includes relationship, residency, and age
requirements to be considered a qualified child. The bill would increase all threshold income
amounts and the amount of the credit per qualifying child based on the cost-of-living adjustment
published in the Internal Revenue Code beginning in tax year 2025 and annually thereafter.
The Honorable Adam Smith, Chairperson
Page 2—HB 2687

The Department of Revenue would be required to submit an annual report on the child tax
credit that includes the number of taxpayers receiving the credit, the adjusted threshold income
amounts, and adjusted credit amounts. The report would include an analysis of the cost of the tax
credit and include any other information necessary to evaluate the effectiveness of the tax credit.
The report would be submitted to the Senate Committee on Assessment and Taxation and the
House Committee on Taxation on or before January 31 of each year.

Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- $176,040 --
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Expenditures -- $176,040 --
Revenues
State General Fund -- ($190,900,000) ($192,800,000)
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Revenues -- ($190,900,000) ($192,800,000)
FTE Positions -- -- --
The Department of Revenue estimates that HB 2687 would decrease State Geneal Fund
revenues by $190.9 million in FY 2025, $192.8 million in FY 2026, and $194.7 million in FY
2027. To formulate these estimates, the Department of Revenue simulated this tax policy change
based on actual tax return data from tax year 2021. The Department estimates that 733,161 credits
would be claimed for resident children with 11,074 being on married filing separate returns. The
cost of each credit is dependent on the Kansas adjusted gross income on returns and filing status.
The Department estimates that the number of tax returns grows approximately 1.0 percent each
year.
The Department indicates that the bill would require $176,040 from the State General Fund
in FY 2025 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 Department of Administration indicates that adjusting state income tax collections has
the potential to have a fiscal effect on the amount of revenue collected from its debt setoff program.
This program intercepts individual income tax refunds and homestead tax refunds and applies
The Honorable Adam Smith, Chairperson
Page 3—HB 2687

those amounts to debts owed to state agencies, municipalities, district courts, and state agencies in
other states. Debts include, but are not limited to child support, taxes, educational expenses, fines,
services provided to the debtor, and court ordered restitution. As the dollar amounts of refunds
are increased, the amount available for possible debt setoffs is also increased. However, the
Department is unable to make an estimate of the amount of additional debt setoffs that would be
intercepted as a result of the bill. Any fiscal effect associated with HB 2687 is not reflected in The
FY 2025 Governor’s Budget Report.

Sincerely,

Adam C. Proffitt
Director of the Budget


cc: Tamara Emery, Department of Administration
Lynn Robinson, Department of Revenue