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


April 1, 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 2845 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2845 is
respectfully submitted to your committee.
HB 2845 would allow 100.0 percent of unreimbursed employee business expenses as
reported as job expenses and certain miscellaneous deductions on federal income tax returns to be
claimed as an itemized deduction on state income tax returns beginning in tax year 2024 and in
each future tax year. The bill would also remove outdated language from previous tax years.

Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- $74,856 --
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Expenditures -- $74,856 --
Revenues
State General Fund -- ($43,800,000) ($34,100,000)
State Highway Fund -- -- --
Federal Fund -- -- --
Total Revenues -- ($43,800,000) ($34,100,000)
FTE Positions -- -- --
The Honorable Adam Smith, Chairperson
Page 2—HB 2845

The Department of Revenue estimates that HB 2845 would decrease State General Fund
revenues by $43.8 million in FY 2025, $34.1 million in FY 2026, and $34.4 million in FY 2026.
To formulate these estimates, the Department of Revenue reviewed federal tax return data that
indicates that the total unreimbursed employee expenses claimed on federal returns when the
deduction was allowed in tax year 2017 was $101.2 billion. Assuming 1.0 percent of these
expenses occurred in Kansas and would be taxed at an effective rate of 3.1 percent, the impact of
this deduction would have been approximately $31.4 million per tax year. The individual income
tax estimate for FY 2025 includes 100.0 percent of tax year 2024 tax liability and 30.0 percent of
tax year 2025 tax liability. The individual income tax estimate for FY 2026 includes 70.0 percent
of tax year 2025 tax liability and 30.0 percent of tax year 2026 tax liability. The Department
estimates that the number of tax returns grows approximately 1.0 percent each year.
The Department indicates that the bill would require $74,856 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. Any fiscal effect associated with HB 2845 is not
reflected in The FY 2025 Governor’s Budget Report.


Sincerely,

Adam C. Proffitt
Director of the Budget


cc: Lynn Robinson, Department of Revenue


Statutes affected:
As introduced: 79-32