The "Insurance Savings Account Act" establishes designated savings accounts for individuals and corporations to cover eligible insurance-related expenses, such as premiums and deductibles. Contribution limits are set at $6,000 for individuals, $12,000 for married couples filing jointly, and $25,000 for corporations. The bill outlines account holder responsibilities, including maintaining documentation for eligible expenses and the consequences of using funds for non-eligible purposes, which may lead to tax recapture. Financial institutions are not required to track account usage or determine eligibility for tax modifications, while the Secretary of Revenue is tasked with creating annual reporting forms and adopting necessary regulations by December 1, 2025.

Additionally, the bill modifies the Kansas tax code to clarify the treatment of contributions and withdrawals from savings accounts, including adoption and insurance savings accounts, with specific contribution limits and exclusions for income earned. It introduces adjustments to federal adjusted gross income, including the treatment of contributions and earnings from these accounts, and establishes a framework for handling federal net operating loss carrybacks. The bill also proposes changes to the calculation of federal taxable income for Kansas residents, including specific additions and subtractions to taxable income, and repeals existing statutes K.S.A. 2024 Supp. 79-32,117 and 79-32,138, indicating a significant shift in the tax code. The act will take effect upon publication in the statute book.

Statutes affected:
As introduced: 79-32