The bill introduces significant changes to the taxation of business and financial institution income in Kansas by implementing a single sales factor for apportionment starting in fiscal year 2026. It mandates that the director of the budget certify excess corporate income tax revenues, which will lead to a reduction in corporate income tax rates. The bill outlines specific deductions from income when using the single sales factor and establishes guidelines for determining the location of sales, notably excluding sales from a unitary business group of electric and natural gas public utilities from this apportionment. Additionally, it amends several sections of the Kansas Statutes Annotated to reflect these changes and introduces a new section allowing for the apportionment of business income based solely on the receipts factor for tax years commencing on or after January 1, 2028.

Moreover, the bill allows taxpayers to elect a sales factor method for apportioning income, effective and irrevocable for the taxable year of the election and the following nine years. It introduces a deferred tax impact deduction for publicly traded companies starting July 1, 2025, to offset changes in net deferred tax liabilities or assets due to the new apportionment method. The bill also revises tax rates for individuals and corporations, establishing new tax brackets for tax year 2024 and beyond, while exempting certain entities from state income tax and repealing outdated statutes. The act will take effect upon publication in the statute book.

Statutes affected:
As introduced: 79-1129, 79-3271, 79-3279, 79-3287, 79-32