SESSION OF 2021
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2045
As Amended by House Committee of the Whole

Brief*
HB 2045, as amended, would revise certain tax credits
pertaining to angel investors and home renovations for
disabled family members.

Angel Investor Tax Credit
The bill would revise the Kansas Angel Investor Tax
Credit Act (Act) by extending the sunset on the program from
tax year 2021 to tax year 2026, amending applicable
definitions, removing certain program restrictions, and
increasing program tax credit amounts and annual program
limits.
Program Sunset
The bill would extend the sunset on the angel investor
tax credit from tax year 2021 through tax year 2026.
Definitions
The bill would amend the definition of “qualified
securities” with respect to the use of debt instruments as
qualifying forms of investment. Debt instruments permitted to
be used as a form of investment would include any debt that:
● Is subordinate to the creditors of the business
receiving the investment,
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
 ● Requires no payment by such business, and
● Will convert to some form of equity before the
business receives any additional funds.
Tax Credit Limits
The bill would make the following changes to limits on
tax credit dollar amounts:
● Increase single-year tax credit amounts
○ From $50,000 to $100,000 for a single
Kansas business, and
○ From $250,000 to $350,000 for a single
qualified investor;
● Change the maximum value of the tax credit from
equal to 50 percent, to up to 50 percent of the
qualifying investment; and
● Set annual tax credit limits at $6.0 million in tax
years 2021 and 2022, with a $0.5 million increase
each tax year after that through 2026.
○ Any unused tax credits for a given year would
be carried over for use in future tax years
through 2026.
Restrictions on Investments and Investors
The bill would remove or modify certain restrictions on
investments and investors:
● Venture capital companies would be permitted to
receive tax credits;
● Investments in Kansas Venture Capital, Inc., would
be permitted;

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 ● In order to receive a transferable credit, the bill
would require an investor to have no current tax
liability at the time of investment, rather than no tax
liability for the preceding three years;
● The recipient of a transferable credit would not
need to be an accredited investor as defined by
federal regulation (17 CFR 230.501(a)); and
● Provided that an investment was made lawfully,
investors would not lose any tax credits if the
business in which the investment was made were
to lose its designation as a qualified business.
Clawback Provision
The bill would modify the clawback provision in the Act.
Currently, any business receiving financial assistance under
the Act is required to make repayment to the Kansas
Department of Commerce if the business ceases to be a
qualified business or moves its operations outside of Kansas
within ten years. The bill would require businesses to meet
these qualifications for a minimum of:
● Ten years for bioscience businesses, and
● Five years for any other business.
Home Renovation Tax Credit for Disabled Family
Members
The bill would increase the maximum tax credit, from
$9,000 to $15,000, for home renovations made for a disabled
family member’s access. Under current law, the tax credit that
may be claimed is equal to the lesser of either $9,000 or the
applicable percentage of construction expenditures, which
decreases as the taxpayers’ federal adjusted gross income
(FAGI) increases; a taxpayer with an FAGI no greater than
$25,000 has an applicable percentage of 100.0 percent. The
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bill would allow taxpayers with an FAGI of $60,000 or less to
be eligible for the tax credit of $15,000. The bill would phase
out the credit by increments of 10.0 percent for each $10,000
increase in FAGI. The bill would also distinguish tax credits
eligible for married individuals filing jointly and all other
individual taxpayers, who would be eligible for the maximum
credit if their FAGI is no greater than $40,000.
Under current law, if a taxpayer’s liability is less than
$2,250, then portions of the credit may be refundable in the
first, second, and third years equal to one-fourth, one-third,
and one-half, respectively. The bill would increase the
taxpayer’s liability threshold from $2,250 to $3,750.
Starting in tax year 2022 and for all subsequent tax
years, the bill would adjust the maximum tax credit and the
tax liability threshold by a cost-of-living amount determined
under Internal Revenue Code section 1(f)(3).

Background
The bill was introduced by Representative Owens.

House Committee on Commerce, Labor and Economic
Development
In the House Committee hearing on January 13, 2020,
Representative Owens provided proponent testimony, as did
representatives of Artio Medical, Inc.; BioNexus KC;
Enterprise Center in Johnson County; the Greater Kansas
City Chamber of Commerce; the Kansas Department of
Commerce; KC Tech Council; the Overland Park Chamber of
Commerce; and the Wichita Regional Chamber of
Commerce. Written-only proponent testimony was provided
by representatives of Fennik Life Sciences and Women’s
Capital Connection. Proponents of the bill stated the bill’s
clarifications and removal of restrictions would increase the
effectiveness of the program.

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 A representative of the Kansas Policy Institute testified
as an opponent to the bill, voicing concerns over the
impossibility of determining whether the program has been
successful, as discussed in a 2020 Legislative Post Audit
report on the Angel Investor Tax Credit Program.
No neutral testimony was provided.
A representative of BioKansas who did not testify at the
hearing appeared as a proponent of the bill prior to the
discussion and action on the bill on January 28, 2020.
The House Committee adopted amendments that would
make technical changes and clarify that investors would not
lose tax credits if the investment was made lawfully, even if
the business invested in were to lose its designation as a
qualified business.

House Committee of the Whole
The House Committee of the Whole amended the bill to
add provisions related to tax credits for home renovations for
disabled family members.

Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill as introduced, the Kansas Department
of Revenue (KDOR) estimated that, if the bill is enacted,
State General Fund (SGF) revenue would decrease by $1.9
million in FY 2022, by $6.0 million in FY 2023, and by
increasing increments of $0.5 million each year through FY
2026 to $8.0 million. KDOR noted program utilization has not
reached its cap in previous tax years, but the removal of
restrictions by the bill would lead to full utilization of the
credits in future years. In order to implement the bill and
modify the automated tax system, $6,445 would be required
from the SGF in FY 2022, although additional expenditures

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might be necessary should KDOR require contracting of
outside programming resources. The fiscal note states no
additional staff would be necessary for either KDOR or the
Department of Commerce to implement and administer the
changes to the angel investor program.
The Department of Revenue estimates the enactment of
the provisions related to home renovations for disabled family
members would reduce SGF receipts by a negligible amount,
beginning in FY 2022.
Any fiscal effect associated with the enactment of the bill
is not reflected in The FY 2022 Governor’s Budget Report
Tax credits; Angel investors; economic development; disability access


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Statutes affected:
As introduced: 74-8132, 74-8133, 74-8136, 74-8131
As Amended by House Committee: 74-8132, 74-8133, 74-8136, 74-8131
{As Amended by House Committee of the Whole}: 74-8132, 74-8133, 74-8136, 79-32, 74-8131