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Minutes for HB2011 - Committee on Taxation
Short Title
Providing a Kansas income tax subtraction modification for certain amounts received as compensation for members of the armed forces.
Minutes Content for Mon, Jan 30, 2023
Chairperson Adam Smith opened the hearing for HB2011.
Adam Siebers, Assistant Revisor, provided an overview for HB2011 to provide a Kansas income tax subtraction modification starting in tax year 2023 for compensation of members of the armed forces. (Attachment 1)
In response to a question regarding subtraction modifications, Mr. Siebers noted the Kansas income tax starts with the federal adjusted gross income. Modifications either deductions or add backs are made to arrive at the Kansas adjusted gross income. HB2011 would allow individuals serving in the armed forces to subtract compensation received to determine Kansas taxable income.
Kathleen Smith, Kansas Department of Revenue, estimates that HB2011 would reduce the State General Fund revenues by $10.9 million in FY2024 and $8.4 million in both FY2025 and FY2026. She noted data was collected from the DMDC DoD personnel workforce reports and publications. It was reported there are approximately 8,200 active duty members and 10,165 National Guard members that list Kansas as their resident state. Based on this information and using the effective rate is how the department came up with the estimate. Ms. Smith stood for questions from Committee members.
Proponents:
Representative Pat Proctor, House District 41, testified as a proponent for HB2011 noting the bill would exempt all pay and benefits for military service regardless if they are active, reserve, or National Guard. He noted Texas and Alaska have no income tax and most active duty service members change their residency to one of these states when stationed in those locations. When the service members and their families come to Kansas, they maintain their residency in those states to avoid paying Kansas income tax. HB2011 would help Kansas to be a military friendly state to entice service members to stay in Kansas after they separate from the military. (Attachment 2) Representative Proctor stood for questions from Committee members.
Eugene Bradley, Legislative Liaison, Enlisted Association of the National Guard of Kansas noting the purpose of HB2011 is to make Kansas a more desirable state for service members to call home through lowering the taxes for those who serve. (Attachment 3) Mr. Bradley stood for questions from Committee members.
Michael Kelly, Military Officers Association of America, testified as a proponent for HB2011 noting the accuracy of the fiscal note this year is a much better picture. He noted the data appears to be accurate and comprehensive but does not include the change in consumption taxes that would result from higher take home pay. Mr. Kelly stated he will study the fiscal note in its entirety and if any concerns will send to Committee Assistant for Committee members. Mr. Kelly was appreciative that HB2011 included the National Guard members who serve in the National Guard of another state. Missouri Air National Guard has a unit in St Joseph with 91 members that are Kansas residents. Under previous versions of this bill and Kansas laws, if you serve in the national guard in another state you are excluded from the benefit which HB2011 does not. (Attachment 4) Mr. Kelly stood for questions from Committee members.
Nichole Inskeep, Major, Kansas Army National Guard Association of Kansas, testified as a proponent for HB2011. The average guardsman receives approximately $18,000 per year for their service to the State of Kansas which adds up to around $500 in income taxes. Kansas is one of about ten states that taxes military income. (Attachment 5) Ms. Inskeep stood for questions from Committee members.
Written testimony was submitted by the following as proponents for HB2011:
William Greer, Colonel, U.S. Army (Written for HB2011 and HB2036) (Attachment 6)
Eric Stafford, Kansas Chamber (Attachment 7)
Lawrence Hannan, Citizen of Wamego, Kansas (Attachment 8)
Chairperson Smith closed the hearing for HB2011.
